Lower rates may be looming

Westpac’s chief economist Dominick Stephens said Graeme Wheeler’s comments, which were a lot more dovish than had been expected, had prompted a drop in swap rates. He said that could lead to lower mortgage rates.

“This will stimulate the housing market further, an unhelpful development for the RBNZ.”

Wheeler again signalled the bank was keeping an eye on house price inflation, he pointed out that the labour market remained weak and the high dollar was hurting exporters.

He had previously ruled out any cut to the official cash rate but this time appeared not to rule it out.

ANZ chief economist Cameron Bagrie said the statement had poured cold water on ideas that a rate hike could be looming and that people should rush to fix mortgages.

“Rates aren’t going anywhere for a long time.”

Wheeler said there would be no OCR increases this year.