Market doesn't believe RBNZ's tough talk

He doubts the RBNZ really wants to raise the OCR as higher interest rates will have too big an effect on mortgage holders.

Patten believes the RBNZ wants the OCR to stay at 5.5%. “If interest rates do go up it is just going to put further pressure on people.”

Reserve Bank deputy governor Christian Hawkesby told the NZ Herald the tough talk on interest rates is not a game. The RBNZ  signalled in its November Monetary Policy Statement it will increase the OCR if inflation does not drop.

Hawkesby’s comments came as financial markets continued to bet on the OCR being cut next year, and two-year swap rates fell to below where they were early last week.