OCR announcement expected to have a downbeat tone
ANZ Market Focus says it expects the Official Cash Rate (OCR) to be left unchanged at 2.5% and the timing of the tightening cycle vague to give the Reserve Bank flexibility.
"Specifically we struggle to see why the Reserve Bank would continue to include references to "the middle of 2010" in regards to tightening policy, given that we are now already in March."
It puts the patchiness in economic momentum down to four reasons, a backdrop of household deleveraging and a structural imperative to improve New Zealand's external position, some success the Reserve Bank is having with its liquidity regime, continued global unease and some uncertainty regarding impending tax changes.
"Of course there is a host of other reasons, but we believe these four capture the thrust of the patchiness that is being reflected in hard data such as unemployment and investment."
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