Adrian Orr 

PHOTO: RBNZ Governor Adrian Orr 

The head of the Reserve Bank (RBNZ) says New Zealand entered its latest lockdown in about the best economic position possible, so interest rates are unlikely to stay where they are for long.

And an independent economist says it’s unlikely leaving the official cash rate (OCR) at 0.25 will do more to make the housing affordability crisis worse.

RBNZ Governor Adrian Orr on Wednesday announced the OCR would be staying where it was, after the country was suddenly plunged into the second nationwide level 4 lockdown after a community case of the highly contagious Delta variant of COVID-19 was found.

Before then, it was widely expected the OCR would go up by as much as 50 basis points, which would have been the first hike in seven years.

Official Cash Rate

House prices above sustainable levels | RBNZ

“We make the decision on the day,” said Orr.

“Interest rates need to be higher because inflation pressures are rising and we are at maximum sustainable employment. That is still our view.

“The good news is that we can wait… without doubt the direction for interest rates is upwards.”

He said after last year, he and others know a lot more about how to handle the economics of a lockdown.