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OCR predictions change amid strong data

Better-than-expected economic indicators have prompted forecasters to change their predictions for the official cash rate.

Wednesday, February 3rd 2021, 1:48PM

Unemployment figures today revealed joblessness fell below 5% in the three months to December.

Stats NZ data showed a drop in the seasonally adjusted unemployment rate from 5.3% to 4.9%. 

The surprise figures were enough for ANZ chief economist Sharon Zollner to abandon her prediction of another OCR cut.

Zollner said: "We no longer expect the RBNZ to cut the OCR again this cycle." She added: "We are inclined to take this at face value and conclude that conditions are unambiguously better than previously feared." 

The ANZ economist said the Reserve Bank could be more "patient" in its approach, and predicted an expansionary stance from the central bank. 

"The RBNZ’s employment and inflation mandates are now looking more achievable, with the economy better placed to weather headwinds than previously feared," she added.

BNZ economists went one step further, and predicted the next move for interest rates would be up.

Head of research Stephen Toplis said: "We have been warning for some time that the scene was being set for the next move in interest rates to be up. Indeed, we abandoned the prospect of sub 0.25% rates back in early November last year. As relatively hawkish as we were, we were not prepared to be definitive that rates would rise. Now we are."

The bank made a bold prediction that rates would begin to rise again in May next year.

"There is still massive uncertainty as to when and by how much but, today, we are formally building in a first rate hike in May 2022," the BNZ team added.

Tags: ANZ BNZ OCR OCR forecasts

« BNZ halts high LVR investor loansReverse mortgage market set to triple »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.95 3.29
ANZ 4.44 3.10 3.50 3.84
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.50 2.90 3.24
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.55 2.95 3.29
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.55 2.95 3.25
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.15 3.22 3.85
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
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 Bank - Online 1.95 1.85 2.35 2.45
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.29 ▲2.69 ▲2.99
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 3.34 3.34 4.14
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 2.49 2.49 3.29
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.29 - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.89 3.19
The Co-operative Bank - Standard 4.40 2.99 3.39 3.69
TSB Bank 5.34 3.30 3.69 4.04
TSB Special 4.54 2.50 2.89 3.24
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.15 3.49 3.89
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.89 3.29
Median 4.54 2.68 2.99 3.29

Last updated: 29 July 2021 9:04am

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