Economic Note: RBNZ May 2017 OCR and MPS

The OCR remained on hold at 1.75% as widely expected.  What surprised, though, was that recent events have had a neutral impact on the RBNZ’s OCR outlook.  To underscore that message, the RBNZ explicitly said the impact of recent events was “neutral”.  In addition, the RBNZ’s published forecast of the OCR was the same as that published in February, showing a late 2019 start to the tightening cycle.  We had expected the RBNZ would bring forward the implied tightening cycle at least 6 months into the first half of 2019.  The RBNZ’s key message remains that there is absolutely no hurry, particularly compared to market pricing, to lift the OCR.

We still expect, though, that the RBNZ will eventually start lifting the OCR at the end of 2018.  We expect inflation pressures will firm earlier than the RBNZ expects, and that inflation’s temporary dip in 2018 won’t be as far as the RBNZ currently forecasts.  But the end of 2018 is still a “considerable” time away, and later than market pricing.  The RBNZ’s unchanged stance should help anchor NZ short-term interest rates at a low level, though term rates will still be heavily influenced by global ebbs and flows.

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Nick Tuffley

ASB Chief Economist

Since starting out in 1997 as an economist, it's fair to say Nick has seen a few hair-raising moments over the years, including the Asian Financial Crisis and the Global Financial Crisis.

One of Nick's strengths is his ability to communicate complex ideas in a readily understandable and entertaining way.  He thrives on helping people understand the economic environment to help enrich the quality of their business or personal life. He’s proud to lead a team that has won two Forecast Accuracy Awards from Consensus Economics, and has a strong track record with their Official Cash Rate and dairy price forecasts. 

Nick grew up in Christchurch and graduated with a Master of Commerce degree from the University of Canterbury.  He learned his economic ropes at the Reserve Bank of New Zealand before a long stint as a Senior Economist at Westpac, and joined ASB as Chief Economist in 2007.

Jane Turner

Senior Economist

Originally hailing from sunny Nelson, Jane moved to Auckland to join the ASB team in 2008.  As Senior Economist, Jane's main focus is co-ordinating the team’s macro-economic forecasts.  In this key role, Jane was thrilled by the team’s twice consecutive win of the Consensus Economics Forecast Accuracy award.   

During her decade-long career in economic forecasting, Jane has gained a thorough knowledge of the New Zealand economy.  Her current focus is on New Zealand GDP growth, including both manufacturing and the construction sectors.  She has spent time forecasting most sectors of the economy, including inflation, trade, housing, labour and financial markets.

Prior to joining ASB, Jane honed her macro-economic forecasting skills at the Reserve Bank of New Zealand.  Jane is a qualified scarfie, attending Otago University and graduating with a Bachelor of Commerce in Economics with 1st class honours.  In 2014, she took a career break from ASB to travel the world and learn to snowboard.

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