Timing of OCR increases under discussion

Bollard said "While it is appropriate to keep the OCR on hold today, it remains likely that further removal of monetary policy support will be required at some stage."

This statement will give some comfort to borrowers on floating and short term interest rates, but it doesn’t give a lot of certainty around the timing of increases.

Economists maintain the view that the next OCR increase won’t happen until March. However a view starting to emerge today is that when increases start they will be bigger and higher than are currently being forecast.

Westpac says, “we expect that by the second half of next year the OCR will be rising further and faster than the RBNZ's current projections.”