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Last Article Uploaded: Friday, December 3rd, 9:22PM

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Will it be a 25 or 50 basis point rate increase this week?

Economists are sure the Reserve Bank will increase the official cash rate this week, but are divided on the size of the increase.

Monday, November 22nd 2021, 8:48AM 1 Comment

The OCR will rise for a second consecutive time on Wednesday, according to a consensus of economists.

If so it will only be the second time the RBNZ will have raised the rate consecutively since 2014.

At Official Cash Rate (OCR) review, rechristened the Monetary Policy Review (MPR), the rate rose in October from 0.25% to 0.50%.

Westpac now expects a further rise of 25 basis points to 0.75%. But it says under the RBNZ’s own criteria, it is possible to make the case for a 50 basis point move, to 1%.

As a result, the market has been factoring in a 30-40% hike in retail rates. That will cause market volatility whichever way the RBNZ goes.

ANZ has today raised its one to three year fixed rates by between 20 and 30 basis points.

The ANZ is also expecting a rise of 25 basis points to 0.75%, and it also attributes this to a buoyant economy, low unemployment and inflationary risks.

The only issue is whether the rise will be 25 or 50 bps. ANZ is favouring a 25 point rise by odds of 60: 40.

ANZ says monetary conditions have already tightened quite a bit with mortgage rates rising at the fastest rate in 15 years.

It adds inflation, which is 4.9%, is likely to reach 6%, and the base rate will reach 2% by the end of next year. 

ASB is also forecasting a 25 basis point rise, but it adds a rider: the risk of a 50 basis point rise is “live”, to quote the bank's language, and not just for November, but for February as well. 

But the bank says the balance of probability is for a 25 point rise, largely because the market has raised interest rates anyway, thereby doing the RBNZ's work for it.

ASB is forecasting a peak OCR of 2.5%.

Tags: OCR forecasts

« Heartland increase HER LVRBNZ has further toughened its lending criteria »

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Comments from our readers

On 22 November 2021 at 9:44 am Amused said:
Expect a 50 basis point rise.

ANZ have now increased their 3 year special fixed rate by 1.26% since 21st October and nobody in the mainstream media is talking about this as they are all too focused on COVID-19. I think the banks know this to....

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA ▲4.60 3.65 4.35 4.69
ANZ 4.79 4.25 4.95 5.35
ANZ Blueprint to Build 2.03 - - -
ANZ Special - 3.65 4.35 4.75
ASB Back My Build ▲2.29 - - -
ASB Bank ▲4.60 3.65 4.35 4.69
Avanti Finance 4.55 - - -
Basecorp Finance 5.49 - - -
Bluestone 3.74 3.54 3.89 4.09
BNZ - Classic - 3.65 4.35 4.69
BNZ - Mortgage One 5.15 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Rapid Repay 4.95 - - -
BNZ - Std, FlyBuys 4.95 4.25 4.95 5.29
BNZ - TotalMoney 4.95 - - -
CFML Loans ▲5.35 - - -
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 - - -
First Credit Union Special 5.85 3.59 4.09 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 5.25 4.00 4.60 -
HSBC Premier 4.49 2.19 2.45 2.69
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 4.15 3.29 3.85 4.19
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank ▲4.25 ▲4.54 ▲5.20 ▲5.54
Kiwibank - Offset ▲4.25 - - -
Kiwibank Special ▲4.25 ▲3.69 ▲4.35 ▲4.69
Liberty 4.84 - - -
Nelson Building Society 4.95 ▲4.29 ▲4.85 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.39 3.54 3.89 4.09
SBS Bank 4.79 3.65 4.19 4.25
SBS Bank Special - 3.15 3.69 3.75
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲3.45 - -
The Co-operative Bank - Owner Occ ▲4.75 ▲3.65 ▲4.35 ▲4.69
The Co-operative Bank - Standard ▲4.75 ▲4.15 ▲4.85 ▲5.19
TSB Bank 5.34 4.09 4.74 4.99
TSB Special 4.54 3.29 3.94 4.19
Unity 5.65 4.15 4.60 -
Wairarapa Building Society 4.99 ▲3.65 ▲4.05 -
Lender Flt 1yr 2yr 3yr
Westpac 5.09 ▲4.29 4.95 5.29
Westpac - Offset 5.09 - - -
Westpac Special - ▲3.69 4.35 4.69
Median 4.77 3.65 4.35 4.69

Last updated: 3 December 2021 8:16am

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