OCR Preview: caution expected from the Reserve Bank

Next Wednesday, the central bank will make its latest decision on the OCR and will make a Monetary Policy Statement. Economists unanimously agree there will be no movement on the OCR, but expect RBNZ to outline a heightened sense of downside risk. The central bank is expected to continue to temper expectations.

A total of 80% of economists interviewed by TMM Online said they believe the OCR has troughed in this cycle at 1.75%, but 20%, including Michael Reddell and ANZ's Sharon Zollner,  expect OCR cuts as sluggish economic growth and weak inflation continue to bite.

No immediate changes are expected from Reserve Bank governor Adrian Orr, but economists will be watching his words closely. ANZ's Sharon Zollner expects "more dovish tone, acknowledging the changing balance of risks and endorsing current market pricing, which favours cuts".

While BNZ's Doug Steel predicts the MPS  "to at least acknowledge developments since November. We don’t think they will net to too much, if any, change in the main policy message".