Microscope out for RBNZ OCR announcement
(30 January 2013 – New Zealand) Economists are tipping the Reserve Bank of New Zealand (RBNZ) will keep interest rates on hold at 2.5 percent this Thursday – a historically low level, maintained since March 2011.
The announcement after the decision will be poured through with precision, as media and economists look for any hint on when the RBNZ will start tightening monetary policy.
The Kiwi economy has struggled in the wake of the Canterbury earthquakes, and recent data suggests the long-anticipated rebound has yet to emerge, with the economy growing at just 0.2 percent in the September quarter.
Additionally, inflation came in below the Reserve Bank's target band in the last three months of 2012.
But assessing just how weak the economy is, and when exactly the Canterbury earthquake rebuild will jolt it back on the growth path, has major banks divided on when rates are likely to start moving upwards.
Bank of New Zealand (BNZ) and Westpac believe the central bank will hike rates by a quarter of a percentage point in December this year, while ASB and ANZ have pushed their bets out to March 2014.
Reports last year that the RBNZ was researching macro prudential tools, sparked widespread speculation the central bank might resort to non-standard measures - such as tweaking the loan-to-value ratio on mortgages - to cool housing and credit markets without having to move the official cash rate.
The Kiwi economy has struggled in the wake of the Canterbury earthquakes, and recent data suggests the long-anticipated rebound has yet to emerge, with the economy growing at just 0.2 percent in the September quarter.
Additionally, inflation came in below the Reserve Bank's target band in the last three months of 2012.
But assessing just how weak the economy is, and when exactly the Canterbury earthquake rebuild will jolt it back on the growth path, has major banks divided on when rates are likely to start moving upwards.
Bank of New Zealand (BNZ) and Westpac believe the central bank will hike rates by a quarter of a percentage point in December this year, while ASB and ANZ have pushed their bets out to March 2014.
Reports last year that the RBNZ was researching macro prudential tools, sparked widespread speculation the central bank might resort to non-standard measures - such as tweaking the loan-to-value ratio on mortgages - to cool housing and credit markets without having to move the official cash rate.
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