tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Monday, September 21st, 9:10PM

Mortgages

rss
Latest Headlines

Emergency OCR cut: economists give their views

Economists believe the Reserve Bank will be reluctant to cut the OCR any further after it slashed rates by 75 basis points this morning. 

Monday, March 16th 2020, 8:05AM

The OCR will remain at 0.25% for at least 12 months, as the government and central bank attempt to get to grips with the Covid-19 crisis.

ASB economists said the central bank's move puts the OCR at the same lower limit identified by Australia.

The RBNZ indicated 0.25% is likely to be the lower limit for this cycle, stating a "large scale asset purchase programme of New Zealand government bonds would be preferable to further OCR reductions".

ASB chief economist Nick Tuffley said the rate cut and commitment to keeping rates steady for 12 months "should help to suppress long-term interest rates".

ASB's team believe 0.25% will be the preferred lower limit of the OCR.

"The RBNZ looks set to explore unconventional tools rather than to test the limits of the OCR," they added.

Independent economist Tony Alexander urged caution on the economic outlook. He expects a recession, "but not like 1987 or 2008".

"Some people are claiming we are seeing a repeat of the 2008-09 global financial crisis, or aftermath of the 1987 sharemarket crash. Neither scenario is applicable, though in the travel and hospitality sectors this will be the worst decline they have ever seen."

BNZ painted a bleaker picture on the outlook. 

"The rescue mission is underway but, even with this help, be prepared for a significant economic downturn. It’s time to batten down the hatches. This is going to be a very rough ride."

Brad Olsen of Infometrics said he was "glad to see something done, finally", and supported the Reserve Bank's plan to delay the introduction of stringent new capital rules. 

Olsen believes the RBNZ could cut the OCR to zero if conditions deteriorate. 

"We do believe there's potential for the Reserve Bank to cut rates again. If this goes further, it would be strange for them to ignore that lever. We do think there's scope for them to cut, despite the Reserve Bank's assertions."

Olsen added: "We are of the view that, despite the Reserve Bank’s position that the OCR will stay unchanged for 12 months, emerging pandemic developments may well force the bank to cut again."

Tags: OCR OCR forecasts RBNZ Reserve Bank

« Banks pass on floating rate cuts after OCR decisionRBNZ delays new capital rules »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 ▼2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.00 3.13 3.02

Last updated: 21 September 2020 10:48am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com