OCR to stay low: Poll

A survey on the magazine’s Facebook page found 55% of respondents expected the Reserve Bank governor to leave the rate at 2.5% this week.

But 40% were expecting the rate to be cut even further.

That would indicate that the market is expecting low interest rates from banks for a while yet – one mortgage broker reported that he was able to secure a floating rate below 5% for a homeowner with a $500,000 mortgage.

And it seems the magazine’s readers are not alone.

A new survey by www.goodreturns.co.nz found financial markets had priced in a single OCR cut in September and another possibility of a cut in December.

Of 12 economists surveyed, all predicted Bollard would keep the OCR on hold this week.

They said his next move would be to increase it from 2.5% to 2.75%– although when is less clear. Nine said it would be in March, the other three said June.

Darren Gibbs at Deutsche Bank said while a "respectable" case for an OCR cut couldbe made, "Dr Bollard's past reluctance to consider cutting the OCR below present levels, in part for fear of triggering a renewed credit boom (especially in housing) ... the hurdle to cut the OCR further is high and has probably not yet been cleared."

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