Market picks rates to rise earlier than RBNZ forecasts

ASB economist Jane Turner says "market reaction to the Monetary Policy Statement was marked, with swap rates soaring on the day. The market response looks overdone relative to the message the RBNZ gave."

She says that although the RBNZ left the OCR at 2.5% there is "still a good chance" the central bank will cut rates again.

However, ANZ economists, in their weekly Market Focus report, pick 2.50% to be the trough for the OCR.

It also notes "there is a massive disconnect between market pricing and the RBNZ's stated policy view. While we expect a ‘gap' to remain based on historical trends, we nonetheless expect the magnitude to close towards the RBNZ view."