ANZ were out on a limb this week with their prediction of further rises in the official cash rate (OCR). So why is it picking an increase from the Reserve Bank (RBNZ)?
Speaking to Q+A, the bank's chief economist Sharon Zollner acknowledged that no other banks were joining her in the call just yet.
"But basically, we think in November the Reserve Bank sounded a little trigger-happy," she said, referencing the RBNZ, including commentary around whether or not further hikes would be coming.
"They published a forecast for the official cash rate that showed 19 points of hiking – typically a hike is 25, so we think they’re pretty close to the line and just need a nudge, rather than a shove."
Zollner said the recent round of economic data provided that nudge, particularly with inflation proving to be "sticky". She said bank governor Adrian Orr would currently be facing a tough decision — given the tradeoffs between either holding or hiking the OCR.
"They'll be aware this could be a policy mistake, but they'll also be aware that they just can't be sure they've done enough to meet their mandated target" of inflation being between 1-3% per year.
Comments made by the Reserve Bank governor this week would suggest that high inflation is still playing on his mind.
At an economic forum at Waikato University, Orr said that he was concerned by the inflation expectations in a recent survey of business leaders and forecasters.
Other banks have at least agreed that OCR cuts are now extremely unlikely in the immediate future.
Q+A with Jack Tame is made with the support of NZ on Air
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