Key Facts:

– The experts are divided on the future direction of the official cash rate (OCR) in New Zealand.
– BNZ and Kiwibank economists expect the Reserve Bank to start cutting the OCR in May.
– ASB economists believe the next OCR cut will not happen until 2025 due to concerns about labor cost and core inflation.
– ANZ and Westpac still expect another 25 basis point increase in the OCR in February.

Article Summary:

The experts are divided on the future direction of the official cash rate (OCR) in New Zealand. Some economists predict that the Reserve Bank will start cutting the OCR in May, citing recent data that supports the idea of earlier cuts. Others believe that the next OCR cut will not happen until 2025, due to concerns about labor cost and core inflation.

ANZ and Westpac, on the other hand, expect another 25 basis point increase in the OCR in February. They believe that more tightening is required to reach the Reserve Bank’s inflation target.

The uncertainty in economic forecasts and the potential for surprises in either direction contribute to the divergence in views among economists. The best advice for homeowners is to find a rate they can cope with, fix it, and avoid worrying too much about future rate changes. Splitting a loan into smaller sections can also be a good strategy to take advantage of both cheaper rates and any potential falls in shorter rates in the near to medium-term.

Source Link: To read the full article, click here.