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OCR Preview Survey: all eyes on inflation comments

Leading economists predict the official cash rate will stay on hold this week, with all eyes on the Reserve Bank's views on inflation and future rate hikes.

Monday, May 24th 2021, 8:11AM 1 Comment

Sharon Zollner

TMM's preview survey, conducted ahead of this week's Monetary Policy Statement and OCR decision, reveals a unanimous view that the central bank rate will be kept at 0.25%.

Economists are on the lookout for any mention of future interest rate hikes driven by inflationary pressure.

The central bank is predicted to revise up its forecasts for GDP, employment, and inflation, factors likely to increase the odds of rising rates in the next year. 

ANZ's Sharon Zollner said the RBNZ would acknowledge stronger data, but believes "tightening is far off".

The bank predicts the first rate hike in August next year, with steady increases up to 1.25% by the end of 2023. 

Donal Curtin of Economics NZ said the central bank would need to consider how much of the current inflationary pressures were temporary, and whether inflation would continue to rise in the long term. 

BNZ's economics team, and independent commentator Tony Alexander, expect a less dovish commentary on the economy, amid recent economic data. 

Kiwibank's Jarrod Kerr agrees, and expects "a de-emphasis on the willingness to cut the OCR further, and perhaps some more-focused discussion on the criteria that would guide the bank in any decision to increase".

Kerr does not believe an increase this year is "plausible".

He said: "Although the OCR will be left unchanged, there’s much the RBNZ must update. The economic outlook has clearly improved, despite some turbulence over the summer months."

Kerr added: "Downside risks have receded, and upside risks are rising. We expect inflation to spike to 2.5% next quarter, and rising costs are a particular pain point for many Kiwi firms. We expect to see a more detailed discussion around the cost-push inflationary wave, and whether or not the RBNZ deems the surge to be transitory."

The Reserve Bank will make its OCR decision, and publish its Monetary Policy Statement, on Wednesday afternoon. 

Tags: inflation OCR OCR forecasts

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Comments from our readers

On 24 May 2021 at 2:04 pm Winka said:
Is this all suggesting that the WEF Davos meeting mid this year is not going to provide a reason for economic disruption/s?

And all the IMF borrowings by New Zealand (DEBT) to provide our mostly wasted billions of dollars of C19 relief not going to have a negative economic effect for a long time?
Including the more than half a billion dollars of that DEBT wasted on motel accommodation this last year for homeless and other families (imagine how many houses that half a billion dollars could have built.....and it looks certain to be repeated this year).

And the "rigged" CPI which Don Brash exposed in his Hamilton speech in 1998 telling us how land and houses had been "conveniently" removed from the CPI so that the Reserve Bank Act would not be broken ( ie: The RBA keeping inflation to a maximum 3% pa ceiling?)

The list is bigger....however, surely that is enough to get you thinking ....for now?

Google it..... if in disbelief!

Remember the saying...."if you laid all the economists in the world, head to toe..........it may be a jolly good thing?"

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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