OCR + 0.25 Basis Points to 3.50%

The Reserve Bank today increased the Official Cash Rate (OCR) by 25 basis points to 3.5 percent.

The statement issued by Reserve Bank Governor Graeme Wheeler noted “strong net immigration is adding to housing and household demand, although house price inflation has moderated further since the June statement.”

He also suggested “It is prudent that there now be a period of assessment before interest rates adjust further towards a more-neutral level.”  So a possible pause in further OCR movements for a while.  What will be interesting to see is whether or not fixed interest rate markets re-price their current future fixed rate expectations…..

In response ANZ has announced a forthcoming raise in variable interest rates but kept fixed interest rates on hold.