OCR Preview Survey: Rate to hold

Economists predict the official cash rate will remain on hold this week, with all eyes on the housing market as the Reserve Bank makes its latest statement.

Monday, April 12th 2021, 9:10AM 1 Comment

Jarrod Kerr

Economists unanimously agree that the central bank rate will stay on hold at its record low of 0.25% this week, according to TMM Online's latest OCR preview survey.

The economic forecasters said they were 98%-99% certain rates would remain at their current level.

The odds of a rate cut are viewed as less likely amid roaring house price inflation.

Most economists believe interest rates will remain where they are for the foreseeable future, with slow economic growth balanced out by wider inflationary pressures here and overseas.

Kiwibank chief economist Jarrod Kerr said: "We think this review is merely a stepping stone to the more important statement in May. In May, we get the Government’s budget to run through, and the RBNZ will formally upgrade their forecasts after a soft finish to 2020."

Donal Curtin of Economics NZ predicted "a long slog towards sustainably meeting the inflation and employment targets".

The Reserve Bank is under increasing pressure to monitor the housing market, after the Government instructed the central bank to consider price inflation.

Curtin said: "They're stuck with a very supportive monetary policy stance, and hence ongoing low mortgage rates will continue to boost the demand side ... not an easy comms wicket to bat on."

Kerr said the Reserve Bank might avoid the topic.

"Any commentary around the housing market will be interesting, but probably avoided by the Reserve Bank. They’re still a long way from comfortably achieving both their employment and inflation mandates."

Economists are also on the lookout for comments about the trans-Tasman bubble, which begins next Monday.

Independent economist Michael Reddell said the bubble was a key thing to watch as the Reserve Bank makes its Wednesday announcement, but predicted "not much material difference to the economic outlook" as a result.

Tags: OCR OCR forecasts

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Comments from our readers

On 12 April 2021 at 12:05 pm Chatterbox said:

If RBNZ follows offshore rate trends then it will be considering a rate hike - & - inflation already underway, Govt. policy demands RBNZ have an impact on house buying (rather than supply which it cannot address as its primarily a financial tool specialist to cause banks to control lending to buyers), it will have pressure to try to lift NZD against AUS with bubble opening in order to attract Australian tourists.

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