The Reserve Bank will first raise the Official Cash Rate in March 2012 due to volatility on global financial markets, despite the improving economic data flow out of New Zealand, Goldman Sachs economist Philip Borkin says.
In a weekly update, Borkin said intensified turbulence on global markets had made him push his pick from September 15 - just two weeks away - back six months for the Reserve Bank's first move in raising the OCR from its 'quake insurance' footing of 2.5%.
Borkin's pick is further out than the retail bank economists, who are picking the first rise in the OCR will be in December, while NZIER economist Shamubeel Eaqub said this week he expected the first hike in June 2012.
Whatever the pick, the trend from economists is clear - that the OCR is expected to stay lower for longer than they thought following the Reserve Bank's indication in July that March's 50 basis point 'insurance cut' in the OCR was unlikely to remain in place "much longer".
This had economists scrambling to push their first-hike picks from December to September 15.
However the caveats for the Reserve Bank's stance were that the domestic situation much continue to show signs of improvement - something economists say is happening - and the much bigger statement that global financial risks would have to recede in order for the central bank to be comfortable it could hike rates.
But the downgrading of the US government's credit rating by Standard & Poor's, and renewed concerns about the Eurozone since the July statement, have had economists pushing their picks back again to December at the earliest.