Reserve Bank leaves OCR unchanged at 2.75% (29/10/2015)

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.75 per cent.

Reserve Bank Governor Graeme Wheeler “To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely. This will continue to depend on the emerging flow of economic data. “

This means that a further OCR cut remains a possibility, but it is hard to predict. The next OCR announcement is 10th December 2015.

Some highlights of the commentary from bank economists currently:

BNZ’s head of research Stephen Toplis told the media that current global conditions could render lowering interest rates to boost inflation fruitless and Westpac stands by their expectation that the OCR will reach 2 per cent in 2016.

ANZ’s Cameron Bagrie says their central scenario is for the cash rate to drop to 2.5 per cent in March but this is dependent on the global scene and the NZ dollar.

ASB’s Nick Tuffley says they expect to see one more 0.25 per cent cut to bring the cash rate down to 2.5 per cent but place a 20 per cent risk on the cash rate dropping below 2.5 per cent in 2016.

This commentary, along with the Reserve Bank’s announcements suggest a period of low interest rates over the short term.

Please contact me if you wish to discuss your interest rate options.