The inflation outlook for the next couple of years continues to look benign, with the "interesting" movements in wholesale and retail interest rates in New Zealand behind us.
So says BNZ chief economist Tony Alexander in this week's BNZ Weekly Overview.
"Further upward movements in rates will be quite limited and the next decent shift is likely to be the start of the monetary policy tightening cycle in July next year at the latest," he says.
"Before then fixed rates are likely to only slowly creep higher with the yield curve slowly flattening from six months out."
Alexander reaffirmed that those who have not yet fixed long term have "missed the boat" in terms of locking in a below average rate, while one and two year fixed rates are still below average.
"But floating looks likely to end up cheaper than fixing one year and the average end result could be the same for fixing two years versus floating as well. One may as well just float now and get principal down as rapidly as possible."
