ASB continues its argument for rate cut

Despite widespread consensus the OCR will remain on hold, ASB suggests that rising term rates and the NZ dollar pose a threat to the "fragile" recovery, which it says is barely getting started.

"Cutting the OCR, in a very benign inflation environment, will help reduce the risk of the recovery being choked off."

It lists the asymmetry of the market; the fragility of the recovery; and the unwanted tightening in monetary conditions since July as reasonable basis for an OCR cut.

"A bold and unexpected move will send a very clear statement to the market about the RBNZ's resolve to keep the OCR low for an extended period. It would also clearly differentiate the economic outlook and monetary policy in New Zealand and Australia," it says.