Euro zone volatility may push out OCR hike
ASB Business Weekly says global markets have been dominated by continued fears that the Greek government will default on its debt and that problems will spread to other European economies.
It says there is also early evidence of liquidity coming under pressure and if such problems spread to New Zealand the Reserve Bank may hold off raising the OCR in June. Reflecting these concerns the market currently only has 40% of a rate hike priced in.
BNZ Markets Outlook says there is concern about the impact of what is going on in Europe and the flow on effect into interest rates.
"Heightened concern about the stability of the global banking systems is again pushing up the cost of short-term funding to the New Zealand banking system and these increased costs will find their way through to borrowers as well."
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