Economists predict new record low for OCR

ASB economists predict a "new record low for the OCR awaits", based on the current balance of risks in the economy. They believe the next RBNZ cut will come in August, with rates then on hold at 1.25% until 2022.

In an update to the market, ASB economists pointed to comments made by RBNZ member Christian Hawkesby last week.

Hawkesby said New Zealand has to "be ready to adapt when changes beckon”, and said the central bank has “further room to provide conventional monetary stimulus if required (using the OCR)”.

Financial markets are also pricing in the likelihood of a further cut. Overnight indexed swaps, a key indicator of where investors think interest rates will go, are pricing cuts of 30 basis points in New Zealand by the end of the year.