NZIER's monetary policy shadow board believes the Reserve Bank should keep its official cash rate on hold at 3.5 per cent tomorrow, as the financial markets are confident it will.
The board is made up of nine economists and business leaders, each of whom apportions 100 points across possible OCR levels to indicate what they believe is the right setting for the economy.
There is 67 per cent support for leaving the rate on hold, up from 62 per cent six weeks ago, and more support as a second-best preference for a lower rate than a higher one.
"Global growth is declining, commodity prices are falling and domestic inflation is muted," said NZIER principal economist Kirdan Lees. "Credit growth is in check so there are few reasons to raise rates right now."
The only member of the shadow board to favour a higher rate is Auckland University economic professor Prasanna Gai, who argues that after a long period of low global interest rates there are signs of both financial stability risks and macroeconomic risks to the world economy and that a more neutral interest rate would leave the Reserve Bank better placed to counter external shocks.
