NZIER’s Shadow Board continues to recommend unchanged OCR, March 2019

25 March 2019

NZIER’s Monetary Policy Shadow Board continues to remain firmly of the view that the OCR should not be changed ahead of the Reserve Bank’s OCR Review on Wednesday.

“The situation is similar to that going into the February OCR, with continued trade tensions between the US and China, slowing growth in China, and little sign that a Brexit agreement is close. Shadow Board members were mixed in assessing the balance of risks, with some seeing increased downside risks while others saw reduced downside risks. Nonetheless, the consensus was that an unchanged OCR was appropriate for now.

Given uncertainty over the growth outlook, there remains some potential for a rate cut over the coming year. This has seen a slight easing bias creep in going into this OCR decision.” said Christina Leung, Principal Economist at NZIER.

“The balance of risks and lack of urgency to normalise monetary policy by lifting interest rates means the Reserve Bank will likely keep the OCR on hold until at least 2020 to allow itself time to assess the situation.”

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