Don’t count on interest rates falling any time soon

Growth is slowing, there are pockets of real weakness in the economy and technically the country has been in a shallow recession, Sharon Zollner, ANZ’s chief economist, says.

“Inflation is also falling, but we don’t think it’s falling quickly enough, especially in the service sector, and of course, house prices look like they have bottomed out and will rise through the rest of this year,” she says.

“We think we’ll be lucky if we don’t see at least one more OCR hike eventually as core inflation pressures prove a bit stubborn.”

If the RBNZ is forced to deliver another hike (or two), Zollner says mortgage rates may rise further yet.