The Reserve Bank formal projections

The Reserve Bank will now issue formal projections of the future expected Official Cash Rate

Guess the percentage
  • 27 October, 2016
  • PROPERTY MANAGEMENT, RESIDENTIAL
  • RBNZ, OCR, Reserve Bank, Official cash rate

One of the more quaint 'guessing games' in the New Zealand economic landscape is coming to an end.

The Reserve Bank says from now on it will be giving an explicit forecast of what it in future expects the Official Cash Rate to be.

Up till now our central bank has in its Monetary Policy Statements issued estimates of where it sees the 90-day bank bill rates being in the future. But these estimates are of course based on what the RBNZ sees as the likely future level of the OCR, which the central bank itself sets.

All that's happened in the past is that bank economists and the like look at the projections of the 90-day rates and subtract around say 10-15 basis points to arrive at what the RBNZ is hinting the future OCR will be.

But no more. From next month's MPS all the cards will be on the table.

It appears that a drop of the OCR to a historic low of 1.75% on November 10 appears virtually 'locked in'.

LJ Hooker NZ

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