OCR preview survey: economists look ahead
Economists say the official cash rate will remain on hold this week, but believe the Reserve Bank could give a signal on imminent rate increases.
Monday, July 12th 2021, 9:35AM
by Daniel Dunkley
Tony Alexander
All of the economists who responded to TMM Online's OCR preview survey said the RBNZ Monetary Policy Committee would keep the OCR on hold this week.
Yet all eyes are on the future, with many predicting rate rises as early as November this year, amid strong economic signals.
Economists are on the lookout for language indicating a rate increase.
Independent economist Tony Alexander said the Reserve Bank could warn "of tightening needed earlier than previously indicated".
ASB's Nick Tuffley said the Reserve Bank could drop its wording around needing "considerable time and patience" for meeting its targets to lift rates again.
Robin Clements at UBS is also monitoring whether the central bank will drop the line.
Forecasters believe a shift in tone and language is more likely to come in August than next week.
Donal Curtin of Economics NZ said: "I think they'll play a straight bat this time and repeat something along the same lines as the 'considerable time and patience' of the last MPS."
in Westpac's OCR preview, acting chief economist Michael Gordon said this week's Monetary Policy Review would "start setting the scene for a normalisation of monetary policy, without committing to a particular timing".
Economists unanimously agreed that interest rates had now troughed in this cycle, and the next move for the OCR is up.
The Reserve Bank will publish its latest OCR decision on Wednesday afternoon. For that and the latest reaction, please visit TMM Online.
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