Market Commentary

13 May 2019 |

Change of OCR Call

Good afternoon


Late Friday afternoon Dominick and Westpac Economics team released their latest forecast for the RBNZ OCR. The major change being the removal of another cut mid-2020, meaning the OCR is now on hold for some time until mid-2022, with the next move being a hike.


Dominick’s summary points are below with the full paper attached for those interested in the full read.


  • Today we are reaffirming our forecast that the RBNZ will keep the OCR on hold at 1.5% for the remainder of 2019.
  • This is a finely balanced call. A follow-up cut is possible if the data weakens further.
  • But as we said on April 3, we expect an economic pickup later this year to remove thoughts of another OCR cut.
  • Previously, we thought that the introduction of capital gains tax (CGT) would prompt an OCR cut in 2020.
  • But the Government has cancelled CGT. That, combined with low mortgage rates, has seen us shift to forecasting 7% house price inflation next year.
  • Under such conditions, we no longer see a rationale for cutting the OCR in 2020.
  • We are now forecasting no change in the OCR until mid-2022.

Read more here....


Kevin Congdon
Risk Management Solutions

Financial Markets | Interest rates |Foreign Exchange | Carbon, Commodities

Market Commentary

Periodically we will provide our observations on areas of the market, we believe to be of interest to investors in the commercial real estate sphere. We may also publish articles from the partners we work with across the valuation, legal, economic and banking professions.

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