Of the 12 economists surveyed, all said the OCR would remain on hold at 2.5% - but one is predicting a move next quarter, to 2.75%.
Tom Kennedy, of JP Morgan, predicted the earliest increase and said he was only 75% sure that the rate would stay the same this week.
Earlier this month, Reserve Bank deputy governor Grant Spencer caused ripples when he said house price inflation was a concern. He said if it continued at its current rate, the bank would consider a monetary response.
Governor Graeme Wheeler had only recently indicated that the OCR would remain on hold until at least next year – and had even hinted that a cut was not entirely out of the question.
Annette Beacher, of TD Securities, said there was no room for a downward move while house prices were increasing so quickly in the main centres. She expects the next move in the OCR to be to 2.75% in December.
FNZC, Infometrics, ASB and BNZ all expect that 25 basis point move to happen in March.
ASB economist Jane Turner said Spencer’s comments had highlighted the Reserve Bank’s concerns about risks from the housing market and a readiness to act if it got out of hand.
But she said the March monetary policy had reviewed house price expectations and lifted the forecast quite aggressively, so there was room for house prices to grow before they became a concern.
Gareth Kiernan, of Infometrics, agreed. “[House price inflation] is such an Auckland-centric story at the moment, they would have to be pretty brave to push up interest rates too soon.”
He said the economy was still sensitive to conditions and while an increase might happen before his March prediction, it was still some way off.
Westpac chief economist Dominick Stephens expected Wheeler to highlight risks on both sides of the OCR equation but to keep the rate at 2.5% this time. He said the bank was stuck sitting on the fence.
“On one side, the Christchurch rebuild and rising house prices have produced surprisingly rapid economic growth and could lead to inflation pressures. But on the other, inflation is low due to the high exchange rate, and the exchange rate could rise even further.”
