No loosening of high OCR settings

The bank says the high OCR looks necessary and a cut is not likely until 2025, with monetary settings to remain tight until at least mid-2026.

While inflation has come off its peak, a persistently tight labour market and higher wage growth have been formidable forces against the RBNZ’s fight to get inflation down to the 1-3% target range.

A number of bank economists are predicting the labour market data will show unemployment rising a few notches up from 3.6% to 3.8-3.9% in the quarter to 30 September and above 5% next year.

ASB senior economist Mark Smith says the pace of hiring is expected to slow given the catch-up from post-COVID worker shortages appears to have largely run its course.