Westpac asks RBNZ to comment on conditions
Senior economist Satish Ranchhod says Westpac doubts the central bank intended to materially tighten financial conditions after dropping the OCR to 2.25% and indicating further cuts are unlikely.
Financial markets responded to the RBNZ’s message and pushed up short-term rates. That signals upward pressure on borrowing rates in both mortgage and wholesale markets, he says.
“The RBNZ could comment explicitly it didn’t intend to tighten conditions, which could assuage concerns in wholesale markets that a normalisation of the OCR might be coming sooner than previously expected.
“This may also help to cap wholesale rates and ease the tightening in financial conditions,” Ranchhod says.
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