Treasury predicts OCR hike in 2020
The Treasury made the prediction as it published today's Half Year Economic and Fiscal Update. In the report, the Treasury forecasts a "gradual rise" in rates from the 2020/21 year. The prediction falls in line with the Reserve Bank, which in August re-wrote its OCR prediction. The central bank also believes a rise in late 2020 is the most likely scenario.
The Treasury previously predicted the OCR would rise early next year, but has changed its tune in light of recent economic data.
Westpac economists said the Treasury had " fallen into line" with the Reserve Bank.
While economists at BNZ added: "All of this, in turn, entails a tightening phase on the OCR. However, nowhere near as early and obvious as the Budget had. Treasury has today delayed the start of the OCR tightening cycle it (still) sees to H2 2020. And with a lower peak – consistent with an OCR circa 3%, a number of years down the track."
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