Bollard keeps rates on hold; OCR cut an outside chance
As expected, Bollard left his official cash rate (OCR) unchanged at its record low of 2.5% and the central bank's forecasts imply it won't rise before the second quarter of next year.
“Rate cuts aren't part of their (the Reserve Bank's) central view going forward,” says Nick Tuffley, chief economist at ASB Bank.
“A rate cut is still on the cards but it's very much a contingency as opposed to the risk some people thought it was,” Tuffley says. He rates the risk of a rate cut, likely in response to Europe's crisis worsening significantly with either a country default or Greece and possibly other countries leaving the euro, at one in three.
Stephen Toplis at Bank of New Zealand says the wholesale financial market currently has a 13% chance of an OCR cut in July priced in.
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