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Bollard likely to keep interest rates steady

Continuing uncertainty about how Europe's debt crisis will be resolved combined with benign inflation locally means Reserve Bank governor Alan Bollard is likely to hold interest rates steady this week.

Monday, January 23rd 2012, 6:25AM

And, as economists continue to push their expectations of when he will next raise rates further into the future, there's even a chance Bollard will change his tightening bias to neutral.

All 13 economists surveyed by Mortgage Rates expect no change on Thursday when Bollard reviews his official cash rate (OCR) which currently stands at a record low of 2.5% where it has remained since March in the wake of Christchurch's devastating earthquake.

Economists are currently evenly divided as to whether the first OCR hike will come in September or December. Craig Ebert at Bank of New Zealand, whose current pick is September, says the risk is it will remain unchanged into next year.

Ebert says while it's possible Bollard will move to neutral, he doesn't expect that will happen.

"He may give some ground in respect of some of the domestic issues," but the European situation now is no worse than when Bollard released his last monetary policy statement (MPS) in December.

Annette Beacher at TD Securities says last week's weaker than expected inflation data - the consumer price index fell 0.3% in the December quarter compared with market and Reserve Bank expectations of a 0.4% increase - will simply provide Bollard with additional comfort about holding rates.

Beacher has pencilled in a 50 basis point OCR rise to 3% for December this year "but risks of slippage into 2013 are high as unstable ground potentially delays the full-scale repairing and rebuilding of Christchurch."

Matt Nolan at Infometrics says there's even a very outside chance Bollard may cut the OCR - certainly the wholesale financial markets are attempting to price in a cut.

The strength of the New Zealand dollar - it is more than two US cents higher than when the MPS was released on December 8 - and the weak recent domestic data, including weak retail sales, could be used to justify a cut, Nolan says.

 

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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