WELLINGTON - Economists expect the Reserve Bank to wait until its March monetary policy statement before raising the official cash rate.
The Governor of the Reserve Bank, Dr Don Brash, is due to review the rate, which influences all interest rates, on January 19.
However, economists for both the Bank of New Zealand and WestpacTrust doubt he will move then, despite the higher than expected 2.3 per cent economic growth of the September quarter.
The bank lifted the cash rate on November 17 and indicated more rises were likely this year.
"It is unambiguously clear that monetary conditions will tighten over 2000, and by more than implied in the November monetary policy statement," said WestpacTrust economists. "However,, we believe the bank will wait until March to make its next cash rate hike."
They said reasons to act in January were outweighed by reasons not to, and the Reserve Bank would be reluctant to move between its formal quarterly statements unless its 0 to 3 per cent inflation target was in dire danger.
The WestpacTrust economists said the scheduled day for the bank's review in January was the same as that for Statistics New Zealand's release of December quarter consumers price index data.
This meant that if the CPI was below the Reserve Bank's forecast of a 0.9 per cent rise, then the bank could be embarrassed if it had moved ahead of a lower-than-forecast inflation figure.
BNZ economists agree that the Reserve Bank will move in March and that the likely rise will be half a percentage point.
They say the risk of drought has diminished and the global economic scene is as good as it is likely to get.
BNZ economists expect the Reserve Bank will lift rates, but not at the pace wholesale markets are expecting.
- NZPA
Brash expected to bide time on rates
AdvertisementAdvertise with NZME.