PHOTO: ASB Bank expects the Reserve Bank expected to “hold fire” on pushing interest rates up while the Government puts out support to businesses. Photo credit: GettyImages.

The Reserve Bank is likely to keep the Official Cash Rate on hold in the wake of new community cases of COVID-19, a leading bank says.

It comes after New Zealand plunged into level 4 lockdown at 11.59pm on Tuesday, following a new community case of COVID-19, the first case since confirmed to be the more infectious Delta variant. An additional four cases were confirmed on Wednesday morning, taking the total number of COVID-19 community cases to five.

Before Tuesday afternoon, economists widely expected the Reserve Bank to lift the Official Cash Rate (OCR) by 25 or 50 basis points, as part of its scheduled Monetary Policy Statement on Wednesday.

But a decision to lift the OCR is likely to be put on hold, ASB Bank says. In a release on Wednesday morning, ASB chief economist Nick Tuffley said given Tuesday’s developments, the Reserve Bank is expected to “pause” on lifting the OCR until there’s more certainty around the extent of the outbreak.