OCR to stay low: Poll
Alan Bollard won’t be raising the official cash rate this Thursday, according to a poll of Landlords.co.nz and Property Investor magazine readers.
Monday, June 11th 2012, 12:00AM
by Susan Edmunds
A survey on the magazine’s Facebook page found 55% of respondents expected the Reserve Bank governor to leave the rate at 2.5% this week.
But 40% were expecting the rate to be cut even further.
That would indicate that the market is expecting low interest rates from banks for a while yet – one mortgage broker reported that he was able to secure a floating rate below 5% for a homeowner with a $500,000 mortgage.
And it seems the magazine’s readers are not alone.
A new survey by www.goodreturns.co.nz found financial markets had priced in a single OCR cut in September and another possibility of a cut in December.
Of 12 economists surveyed, all predicted Bollard would keep the OCR on hold this week.
They said his next move would be to increase it from 2.5% to 2.75%– although when is less clear. Nine said it would be in March, the other three said June.
Darren Gibbs at Deutsche Bank said while a "respectable" case for an OCR cut couldbe made, "Dr Bollard's past reluctance to consider cutting the OCR below present levels, in part for fear of triggering a renewed credit boom (especially in housing) ... the hurdle to cut the OCR further is high and has probably not yet been cleared."
What do you think? Have your say.
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