OCR: What the economists said

BNZ:

We have been critical of the Reserve Bank for delaying the removal its OCR super-stimulus, while economic momentum and inflation risk has accumulated so much. But at least yesterday, while leaving its cash rate at its extraordinarily low level of 2.5%, the Bank clearly beefed up its hawkish rhetoric. With this, it said it was “committed” to lifting the OCR, starting “soon”.   For this we can commend the Bank.

In the end, the Bank talked at far greater length about the economy than we anticipated. We thought it might be inclined to keep in short and sweet. Not so.  Then again, the Bank’s discussion gave us plenty of helpful reference points. And the more we read of it,  the more hawkish it came across.

Yes, there was a simple repeat of the structure of December’s positive speak. But this was added to in no small measure. For example, that “consumer and business confidence were strong” (note the order) and that the rise in net inward migration was now “rapid”. Firms’ pricing intentions got a mention this time, in that they “have been rising”. Construction costs…”risk feeding through to broader costs in the economy” whereas in December the Bank said it all still depends.