While interest rates are still “stimulatory” and low (with the OCR staying at 2.50%) they will sit roughly where they are for the next year, Bollard said.
ASB economist Nick Tuffley said that “interest rates have been pushed out one to two quarters. Instead of implying an (OCR) increase in June next year it's implying December.”
Still, Tuffley warns the central bank should be wary of inflation, particularly house price inflation, taking off again. While the Reserve Bank's view that the Christchurch reconstruction won't ignite house prices there, “the risk is it's not going to hold particularly true in Auckland – real estate agents are reporting increases of more than 10% over last year.”
Anne Boniface, an economist at Westpac, says her bank is holding its prediction that the next hike will be in September next year for now but it may revise its view.
“It (the statement) was a little more dovish than the statement in June. Effectively, it's looking like interest rates are going to be on hold for a year,” Boniface says.
BNZ economist Doug Steel says the statement forecasts 90 day bank bills, the wholesale rate most nearly affected by OCR changes, will be unchanged at 2.7% through to September 2013 and will average 2.8% in the December quarter.
“I would argue strongly that it's (the next OCR hike) not September. It's arguably December or possibly not until 2014,” Steel says.
Bollard's demeanor was “very, very comfortable,” he says. “They do think they're in neutral and just awaiting developments.”
