Jarrod Kerr: Kiwibank economist predicts OCR will be reduced come November

There's some potential light at the end of the tunnel for mortgage holders after today's Reserve Bank update.

The OCR's been held in place at 5.5 percent - the eighth pause in a row.

However, the Bank's tone has softened, with experts predicting inflation will make the one-to-three percent target by the end of this year.

Kiwibank Chief Economist Jarrod Kerr says his bank's sticking to its November forecast for an OCR reduction.

"The commentary that we saw out of the Reserve Bank today suggests they're opening the door to a rate cut earlier than they had expected."

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Episode Transcript

Speaker 1 (00:00):
Ever due for see Allen, if you've got a mortgage,
maybe there's a little bit light at the end of
the tunnel. The Reserve Bank has left the official cash
rate unchanged today, but economists reckon his tone has become softer.
Jared Kerr is key we Bank's chief economist and with
us Now, Hey, Jared, hi, right, So are you expecting
a cup in November?

Speaker 2 (00:16):
Still? Yep. We're sticking with that forecast. And the commentary
that we saw out of the Reserve Bank today suggests
that are opening the door to a rate cut earlier
than they had expected.

Speaker 1 (00:28):
Do they still sound to you? I mean they're saying
that the inflation is going to be within the target
band of one to three this half of the year,
which is bringing it forward slightly, but it's still lingering
concerns about sticky inflation.

Speaker 2 (00:39):
Yeah, there is, But I think they had to acknowledge
the collapse and business confidence we saw last week. And
we've got very weak household confidence at recessionary levels, and
we've been in a recession for a year and a half.
So you know, enough enough, it's time to turn the
tide and start lowering rates.

Speaker 1 (01:01):
Do you think then, okay, that the data that we've got.
So of all the data that we've got between now
and let's say November, what is it that we need
to be looking at to be seeing whether it does
happen in November?

Speaker 2 (01:13):
I think everything comes out in inflation. The next inflation report,
I'm not that interested in. It's the third quarter, the
September quarter inflation report that comes out mid October that
has us excited because we forecast inflation will be below
three percent then and that'll open the door for a
cut in November.

Speaker 1 (01:34):
Good stuff, Jared, so right down to the wire. I
appreciate it. There's Jared Kirky, we Banks, chief economist. For
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