OCR Going Negative is Not a Certainty

It was widely considered that the OCR going negative in 2021 was close to a full gone conclusion but a string of positive data has got investors reassessing the odds of negative interest rates. Inflation figures due this week may help to clarify the picture.

Jason Wong, a currency strategist at Bank of New Zealand, recently said that “if anything, the market is getting cold feet about rate cuts following a run of strong data, including the REINZ housing market data."

Manufacturing, retail-card spending and house sales have all improved, giving credence to the argument that the economy is regaining some momentum. That has helped drive down the probability of the official cash rate falling to -0.25% by April to 28% from 40% on Oct. 8.

The Reserve Bank of New Zealand is aiming to get inflation in the middle of a 1%-3% band. In August, it forecast annual price gains would drop as low as 0.3% in late 2021.

With the election risk now out of the way, Property Investors should watch out for Friday’s inflation number to get a gauge for how much lower home loan rates might go.

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson began investing in property aged 21 and has since bought, developed and sold real estate in the UK, USA, South East Asia and New Zealand. After a career in banking he is now on the management team at Waikato Real Estate and has contributed to property articles for NZ Herald, Stuff and Property Investor Magazine.

Based in Raglan, Oliver's passions extend beyond property to surfing, hydrofoiling, and providing a taxi service for his children.