Interest rate call on knife edge with Reserve Bank communication under fire

  • The Reserve Bank has markets guessing about whether interest rates will hit a new all time low this week.

On Thursday Governor Graeme Wheeler will announce the latest review of the official cash rate (OCR), as he delivers the Reserve Bank’s quarterly update of New Zealand’s economic forecasts.

Although no customers borrow at the rate of the OCR, which is currently 2.25 per cent, it has a direct influence over the interest rates on mortgages and savings.

The announcement is shaping up as the most uncertain since the Canterbury earthquakes, with the bank’s recent behaviour leaving the market split on which way Wheeler will go.

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Economists are finding it increasingly difficult to predict what Reserve Bank governor Graeme Wheeler is going to do when reviewing interest rates.