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.