John Carran: Jarden Economist and Investment Strategist ahead of today's OCR announcement

It’s an important call today for the Reserve Bank as they decide whether to drop the Official Cash Rate.  

Bank economists are divided, Westpac, ANZ and Kiwibank anticipate the Reserve Bank to hold the OCR at 5.5%.  

BNZ is expecting it to go down, as is ASB, who predicts it'll fall by 25-basis points to 5.25% , which would be the first drop since 2020. 

John Carran, Jarden Economist and Investment Strategist, told Ryan Bridge he’s erring on the side of hold. 

He said that although they may hold today, they will signal that interest rate cuts are coming much sooner than they previously indicated. 

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Episode Transcript

Speaker 1 (00:00):
It is ocr day today. Economists, well, I mean, take
your pick. Some say one thing, some say another ASB
predicting a cut of twenty five basis points B n
Z Kiwi Bank also think that they will cut a.
N Z isn't ruling out a cut that's sitting on
the fence, isn't it? Westpac and Kievi Bank think rates
will be held. John Karen is a Jardin economists, investment strategist,

(00:21):
and crystal ballgazer. He's with us this morning.

Speaker 2 (00:22):
A John, Yeah, Good morning, Ryan.

Speaker 1 (00:25):
What are you picking?

Speaker 2 (00:26):
Cut?

Speaker 1 (00:26):
Hold, engage? What's he going to do?

Speaker 2 (00:29):
Look on we're erring on the side of a hold today.
It is a close run thing, though, and we can
see that through the disparity of views we're seen.

Speaker 1 (00:41):
How important is the language that's used around the decision.

Speaker 2 (00:47):
I think it will be incredibly important. I mean, this
is a full monetary policy statement out today, so this
will have refreshed forecasts or predictions from the Reserve Bank,
and I expect that although they may hold today, they
will signal that interest rate cuts are coming very soon,

(01:10):
much sooner than they previously indicated.

Speaker 1 (01:14):
What will that mean for mortgages If they signal cuts
are coming. Do mortgages rates drop?

Speaker 2 (01:22):
Yes? I think they will because what happens is the
banks anticipate cuts down the track, and particularly for those
fixed term interest rates, the one and two year, three
year rates, you will see most likely some cuts to

(01:42):
those rates, even if the Reserve Bank stays on hold,
but signals that cuts are coming, perhaps as early as October.

Speaker 1 (01:53):
Okay, well that sounds promising. We'll have to wait and see,
obviously for two pm this afternoon. Asb reckons that we're
effectively under three percent inflation now, I mean obviously there's
a time lag with data, et cetera. Do you agree
with that?

Speaker 2 (02:05):
Yeah, I think I do agree with that. There is
a very clear that inflation is coming down. Then even
the Reserve Bank admits that they'll be within their one
three percent target bend by the third quarter of this year,
so you know, it's it's quite clear, and people are
expecting that two inflation expectations are coming down and they

(02:28):
are expecting things to ease off further.

Speaker 1 (02:32):
All right, John, thanks so much for your predictions. Hold
from from John, but expecting some language softening around cuts
later this year. John Karen is the Jardin economist and
investment strategistic.

Speaker 2 (02:44):
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Speaker 1 (02:48):
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