ASB predicts mild OCR cycle
The lender predicts that when rates do eventually go up, New Zealand will experience a "mild" tightening cycle, peaking at just 2.75% from late 2021. The predictions, off the back of more bullish Reserve Bank language and strong economic data, are likely to be welcomed by Kiwi homeowners and investors fearing a rapid OCR increase.
ASB's has pushed back its prediction for an OCR increase by six months. It believes rates will begin to rise in August 2020.
Nick Tuffley, Chief Economist at ASB, said: "This reflects our judgement that the growth and medium-term inflation outlook will not be strong enough to clear the high hurdle necessary to trigger an OCR hike.
"The team expects a very mild RBNZ tightening cycle peaking at just 2.75% from late 2021. “This is because the RBNZ will be mindful of not getting policy settings too far out of sync with other central banks,” Tuffley added.
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