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- NZIER: Majority view an RBNZ OCR increase of 25 bps, given inflation pressures are still high
NZIER: Majority view an RBNZ OCR increase of 25 bps, given inflation pressures are still high
“Shadow Board members recommend a smaller hike in the Official Cash Rate (OCR) in the Reserve Bank’s upcoming April Monetary Policy Review,” said the latest New Zealand Institute of Economic Research (NZIER) report.
“The majority view was an OCR increase of 25 basis points, given inflation pressures are still high in the economy and inflation expectations remain above the Reserve Bank’s 1–3 percent inflation target band,” also mentions the NZIER report.
Key comments
However, two Shadow Board members recommended the Reserve Bank keep the OCR unchanged at 4.75 percent.
One of these members considered the OCR should have already peaked, while the other highlighted the increased risk of a recession looming.
Regarding where the OCR should be in a year, the Shadow Board’s core view ranged from 4.25 percent to 5.50 percent.
Some members recommend the Reserve Bank pause with OCR increases after April but keep it elevated for some time to bring inflation down.
There was one Shadow Board member in the business community who viewed the OCR should be lower in a year, given business profitability and finances are already hard hit by the interest rate increases to date.
NZD/USD drops
The news weighs on the NZD/USD prices, together with the sour sentiment, as the Kiwi pair drops to 0.6235, down 0.35% intraday at the latest by the press time.
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