A majority of the NZIER's 'Shadow Board' of experts recommend keeping the Official Cash Rate unchanged this week - but there's a variety of opinions on what should come next

The experts are mostly agreed on what should happen with the Official Cash Rate (OCR) this week - but beyond that there's a wide variety of views.

The New Zealand Institute of Economic Research (NZIER) convenes a panel of experts - academics, economists and business people - a 'Shadow Board' who state their views on what the Reserve Bank (RBNZ) should do ahead of every OCR decision.

Since August last year the RBNZ has made six consecutive cuts to the OCR, taking it down from the cycle peak of 5.5% to a current 3.25%. However, it seems likely that the decision on Wednesday (9th) will be a 'no change'. And the NZIER shadow board reflects that view.

NZIER senior economist Ting Huang said a majority of members recommend that the RBNZ keep the OCR on hold this week.

"While activity remains soft in the New Zealand economy, there are both upside and downside risks to inflation in the near term, given the recent pick-up in annual CPI inflation and heightened global risks. Considering these factors, several members viewed it appropriate for the RBNZ to pause cutting the OCR in July."

Regarding where the OCR should be in a year’s time, members’ picks of the OCR centred on a range between 2.75% and 3.25%.

"This reflects the Shadow Board’s broad view that the monetary policy easing cycle is approaching its end over the coming year, and that the RBNZ continuing to apply a wait-and-see approach beyond July would be appropriate.

"Several members saw little scope for further OCR cuts over the coming year, given the increased ambiguity over New Zealand’s economic and inflation outlook, especially the potential inflationary impact of heightened global uncertainties. However, two members considered further OCR cuts are needed to support recovery in the New Zealand economy," she said.

Shadow board member and BNZ head of research Stephen Toplis said further monetary easing is "probably needed" while fellow member and Kiwibank chief economist Jarrod Kerr noted that our exporters are doing well. But they are exposed to global risks.

"Our economy still needs support, especially in the interest rate sensitive parts. The push-higher in inflation should prove temporary. And the medium-term risks for inflation are to the downside. Most of the move in interest rates towards a neutral setting has happened. A little more is required to reinforce a recovery," he said.

However, Viv Hall, professor at Victoria University of Wellington said the combination of ongoing global uncertainty, little evidence of further downward movement in inflation expectations, and only modest recent easing in cost pressures and pricing intentions, is such that "there is no strong case for downwards or upwards movements in the OCR for some time yet".

And John Pask, economist at BusinessNZ said given very mixed data on the state of the economy, in particular, the upside and downside risks to inflation (principally due to geopolitical risks), "there is a strong argument for the Reserve Bank to sit on its hands until there is more clarity".