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NZIER - Shadow Board divided on where OCR should be

Contributor:
Fuseworks Media
Fuseworks Media

The range of views amongst the NZIER Policy Shadow Board on the appropriate level of the OCR at the Monetary Policy Statement (MPS) release on Wednesday has widened since September. Shadow Board members, on average, still called for the OCR to be kept on hold, but there was an increased skew towards a higher OCR.

"Recent data has been mixed in the wake of the Reserve Bank’s surprise 50 basis point cut to the OCR in August. There are signs of renewed housing market activity, but the labour market appears to be slowing as businesses become more cautious about hiring. The global growth outlook also remains murky.

Shadow Board members highlighted the recent pick-up in house prices, and the financial stability risks that stem from interest rates being too low. This was seen by some Shadow Board members as justification for a higher OCR." said Christina Leung, Principal Economist at NZIER.

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