The Reserve Bank should hike the Official Cash Rate on September 15 and would need to find a good reason not to do so, National Bank chief economist Cameron Bagrie says.
Talking to interest.co.nz after the release of the National Bank’s Business Outlook survey, which showed firming confidence in July, Bagrie said the main reason which would stop Reserve Bank governor Alan Bollard from hiking in September would be harder evidence of global economic fragility.
“If I look at the collection of what [data] we’ve been seeing, particularly locally over the past four weeks, I’m veering towards September," Bagrie said.
"In fact now, I think the Reserve Bank needs a reason not to go in September as opposed to a reason to go, and the issue is whether there’s going to be enough hard evidence of the global fragility – whether the risks there become reality – to stop them raising rates in September," he said.
"That’s a risk, but I don’t like taking a core forecast based on a risk. We go with what we know, and what we know is, the OCR at 2.5% just feels too low."
“Subject to things not going to hell in a hand-basket, the Reserve Bank I think is going to have no choice but to raise the Official Cash Rate in September.”
More soon.
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