Wednesday, 18 August 2021 11:15

Lockdown douses chances of OCR hike

Written by  Sudesh Kissun
Westpac head of NZ strategy Imre Speizer. Westpac head of NZ strategy Imre Speizer.

Economists are suddenly divided over whether the official cash rate will rise this afternoon.

Whereas a day ago, a hike was expected by all major analysts, some have now shifted to an on-hold decision.

Reserve Bank will deliver its monetary policy statement at 2pm.

Westpac head of NZ strategy Imre Speizer says yesterday’s sudden Covid-related lockdown has changed sentiment.

Westpac’s economists argue that regardless of the economic case for higher interest rates, there is nothing to be gained from pushing the OCR higher now, rather than waiting for more clarity on the Covid situation, says Speizer.

Market pricing for today has fallen from a 100% chance of a hike (as at yesterday morning) to 60% currently. “We struggle to construct a plausible RBNZ scenario which would cause no market reaction.

“Thus, on this occasion, we present only two scenarios. “A 25bp hike would indicate the hawkish resolve of the RBNZ, and cause swap rates and the NZD to rise. An on-hold decision would elicit the opposite reaction to the above, but the declines would be limited by an expectation that tightening has merely been delayed.”

More like this

A defining year ahead!

The coming year is looming as a defining one for New Zealand farming, according to Rabobank agricultural analyst Genevieve Steven.

Rising up to challenges

Dr Danny Donaghy is professor of dairy systems at Massey University and a specialist in pasture agronomy and physiology.

China lockdowns hit dairy demand

Covid restrictions in China are likely to slightly dampen milk powder imports into that country, according to Stefan Vogel, Rabobank research general manager for Australia and New Zealand.


FMD scare puts NZ on watch

A recent outbreak of Foot and Mouth disease (FMD) in Indonesia has the NZ agriculture sector and its officials on…

Public round up on glyphosate

The country's environmental regulator agency has released the public feedback it has received on the glyphosate weed killer - commonly…

New bee Guy!

Former Agriculture Minister Nathan Guy will take over as the independent chair of Apiculture New Zealand (ApiNZ).

Machinery & Products

A new approach to apprenticeships

By taking a new approach to its apprenticeship programme, agricultural equipment supplier Norwood says it is ensuring farmers’ machinery will…

Buck-Rake does the job

With many self-propelled forage harvester manufacturers offering machines hitting 1000hp, the bottleneck in any harvesting system is always likely to…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Yeah, right!

OPINION: Your old mate reckons recent ‘research’ carried out by consultants PWC – claiming that ‘actively managed carbon forestry’ creates…

All Claas!

OPINION: Your canine crusader - like many in the sector probably would have - raised an eyebrow when he heard…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter