The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: “As GDP growth picks up, underlying inflation is expected to rise. A gradual increase in the OCR over the next two years will be required to offset this, such that CPI inflation tracks close to the midpoint of the target band over the latter part of the projection. The pace and timing of increases will be guided by the speed of recovery, but for now the OCR remains on hold.”
The OCR has an influence on your home loan floating interest rate. Its not the sole influence, but it is significant and as such your decision whether to fix or float your home loan, could in part be decided by how well you feel the economy is tracking along.
In our view there doesn’t appear to be much in todays statement that suggests the Reserve Bank is in any great hurry to raise. At the time of writing there have been no movements in home loan interest rates that have come through as a result of the statement.