New best prediction for OCR

ANZ’s latest forecast for the official cash rate peak has jumped again, a new high for the cycle.

Saturday, September 17, 2022 at 10:22 am

ANZ Chief Economist Sharon Zollner believes the official cash rate will reach 4.75% before leveling off.

This is higher than the ASB’s forecast of 4.25% and above most other banks’ endpoints of 4%.

OCR is currently at 3%.

Like other banking economists, Zollner is forecasting two more 50-point gains this year.

But she’s so much more.

“The OCR is currently peaking at 4.75% (previously 4%), with an additional 25bp increase in February, April and May next year,” Zollner wrote.

She said the economy had not collapsed and there had been other stresses such as a tight labor market, strong wage growth and a weaker dollar.

Economic growth this week was at the level of 1.7% for the quarter. This is a number that has surprised many people. Zorner said the Reserve Bank would have to see slowing growth and it would be Bitcoin.

“Risks are certainly skewed toward inflation, and inflation expectations have not fallen as much or as quickly as is necessary to push real interest rates to sustained contraction levels,” Zollner said.

“This means OCR has more work to do.”

The current 3% OCR is reflected in the retail lending rate, which has a median one-year fixed mortgage rate of 5.35%.

Proportionally, an OCR of 4.75% boosts the one-year rate by more than 7%.

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