The lender expects the OCR to remain at record lows for “foreseeable future”. It follows the Reserve Bank’s cautious language on the economic outlook this month.
Just before the Reserve Bank’s MPS announcement, ANZ economists told TMM the outlook for the OCR would be similar to that projected in the May MPS, “signalling an increase in the OCR at the end of 2019 – far enough ahead that the RBNZ can alter their strategy as the policy trade-offs and economic conditions change.”
But its weekly note to the market, ANZ economists said the Reserve Bank had made it “abundantly clear” they were reluctant to hike rates, amid sluggish economic growth. The bank believes growth will average 2.5 percent over the next couple of years, below the Reserve Bank’s forecast.
The bank’s economists, led by Sharon Zollner, said: “We are now forecasting that the OCR will be flat for the foreseeable future. Of course it is not that we literally believe the OCR will never be moved ever again; rather, we no longer believe on balance that the next move will necessarily be upwards. Indeed, given how long it is until a hike could plausibly be on the cards, the balance of risks is, if anything, tilted towards the next move being a cut.
ANZ expects core inflation to rise in the near term but says the resilience of inflation “does not look assured”.
