RBNZ Official Cash Rate Expert Predictions March 2021| Finder NZ

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RBNZ Official Cash Rate forecast

Expert analysis and predictions for the Reserve Bank of New Zealand's OCR decisions.

Updated . What changed?

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Wellington cable car

OCR currently at 0.25%

Last RBNZ OCR announcement: 11 November

With LVR restrictions due back in force on 1 March, and more stringent rules to come into effect two months later for investors, we asked our panel of experts for their thoughts on these upcoming changes, how house prices could pan out over 2021, and more.

Skip ahead to read the latest analysis, see how the OCR has changed over time and learn more about how the official cash rate affects you.

What our experts said for February

  • Majority of experts say 40% deposit rule is adequate for investors
  • Property prices expected to jump by 11% in Wellington, 10% in Auckland
  • All experts and economists surveyed expect the OCR to hold at 0.25% in February

November
HOLD
February
HOLD
In uncertain times central banks tread carefully. Given the current state of the economy and elevated asset prices in New Zealand, a change in the OCR would be surprising.

November
HOLD
February
HOLD
While the Reserve Bank is unlikely to have any appetite for further rate reductions in light of stronger expected growth – it is also unlikely to want to upset that recovery with any increase in rates at this time. Instead it will take a “wait and see” approach.

November
HOLD
February
HOLD
The OCR will have to lift at some stage but given the unpredictability of COVID outbreaks, it would be hard to predict when this will happen. With regards to house price pressure, I expect the RBNZ will wait and see how the reintroduction of LVRs will affect the market before being tempted to use OCR as a tool to influence that market.

November
HOLD
February
HOLD
The Reserve Bank will need to leave interest rates low for an extended period to boost inflation above the 2% mid-point and bring employment higher – we're on the right path but there's a lot of distance to be covered. Although economic indicators have been upbeat recently, there's still need for sustained levels of support to the economy. Equally, however, we can't see the need for even more accommodative monetary policy going forward unless circumstances change. The Reserve Bank will need to leave interest rates low for an extended period to boost inflation above the 2% mid-point and bring employment higher – we're on the right path but there's a lot of distance to be covered. Although economic indicators have been upbeat recently, there's still need for sustained levels of support to the economy. Equally, however, we can't see the need for even more accommodative monetary policy going forward unless circumstances change.

November
HOLD
February
HOLD
With recent significant changes to the LVR restrictions, and (with the exception of any impact from the current COVID restrictions) the ongoing stability in the economy, I can't see the need for the RBNZ to make a change to the OCR at this stage. I do believe that we are unlikely to see a further reduction in the OCR, so the next change is likely to be an increase, but probably not within the next 6-12 months at this stage. Having said that, we have all seen how quickly things can change!

November
HOLD
February
HOLD
Economic recovery better and faster than expected, potentially inflation may also be on the rise, either way no call for further ease and case will build in time for normalisation.

November
HOLD
February
HOLD
Hopefully the world is in a better place next year, with vaccinations taking centre stage. The Kiwi economy still lacks foreign tourists and students, but a vaccine passport should change that. We're forecasting solid growth and a gradual return to the RBNZ's mandated targets.

November
HOLD
February
HOLD
I'm hopeful that the vaccine will work and borders will be open by then, stimulating the economy – this may be more ambition than realism though!

November
HOLD
February
HOLD
We need to get the economy positive in a period of uncertainty so don't anticipate any increase, but don't expect it to go lower.

November
HOLD
February
HOLD
There is no serious prospect of an OCR increase this year, with inflation still below target and unemployment well above a NAIRU. Beyond that, forecasting isn't really possible (shocks dominate). There is still a reasonable case for an OCR cut this year, reinforced by a weak world economy and fading fiscal stimulus.

November
HOLD
February
HOLD
The resilience of the New Zealand economy and especially the labour market has surprised everyone. If that trend continues, the next step in the cash rate could well be an increase. However, it is too early to tell whether the trend will hold. I would not expect any such move in the near future for that reason, but at the very least I don't see good reasons for further monetary easing.

November
HOLD
February
HOLD
Once it is clear that inflation is/or will be near the target mid-point.

November
HOLD
February
HOLD
There are still significant downside risks to the economic outlook and so the RBNZ will take a very cautious approach to lifting the OCR.

How has the cash rate changed over time?

What is the Official Cash Rate and who sets it?

The Official Cash Rate (OCR) affects the interest rates that people and businesses in New Zealand pay when they borrow money or earn on their savings. The OCR is set by the Reserve Bank of New Zealand whose aim is to keep prices stable.

The RBNZ does three main things:

  • formulate and implement monetary policy to maintain price stability and support maximum sustainable employment
  • promote the maintenance of a sound and efficient financial system
  • meet the currency needs of the public.

If the economy overheats and inflation rises to an unacceptable level, the RBNZ may increase the cash rate to discourage excessive borrowing and tackle rising inflation. If the economy slows down, the cash rate may be cut to support increased borrowing and spending and boost economic growth.

How the OCR can impact your finances

See how the official cash rate changes can affect your savings, term deposits, mortgages and what you can do about it.

If the rate rises

Ask your lender for a rate discount so that if rates do rise you won’t be worse off, or alternatively, compare other variable or even fixed-rate mortgages to find a better deal.

If the rate gets cut

See how your lender responds to the cut. If they don’t pass on the full rate cut, ask for a rate discount, and if you’re still not happy start comparing what other deals are in the market.

If the rate holds

Compare other variable-rate mortgages to make sure you’re still getting the best deal. If rates are tipped to rise in the near future you may also want to compare fixed rates.

If the rate rises

Find an account which offers the same features and fees but with a better rate.

If the rate gets cut

Consider comparing a competitive term deposit rate so your interest earnings don’t suffer.

If the rate holds

Carry out a quick comparison to make sure you’re getting the best return on your money. See what promotions banks are offering.

If the rate rises

Your rate won’t rise as you locked it in, so you can relax a little. If your fixed-rate mortgage is to end soon, start comparing what deals are on offer, so you don’t find yourself scrambling to lock in another rate.

If the rate gets cut

If you feel your mortgage is no longer competitive, you might want to obtain a quote from your lender to find out possible exit costs. If this figure is reasonable, you might want to consider comparing variable mortgages.

If the rate holds

Because your rate is fixed for an agreed period, a decision by the RBNZ to hold won’t have as much of an effect on you depending on how long you still have to go in your fixed term. As mentioned above, you still might want to monitor other deals in the market to keep informed.

If the rate rises

If rates rise, savings accounts rates could increase as well. If this happens, you might want to compare the rates of high-interest savings accounts. Remember that most term deposits have interest penalties if you withdraw your funds early, so bear this in mind.

If the rate gets cut

Your rate won’t change because it’s locked in, but if you’re nearing the end of your term, start comparing both high-interest savings accounts and term deposits to find a good deal.

If the rate holds

Compare accounts and ensure you’re aware of what’s on offer in the market.

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