Line-ball call for keeping OCR unchanged in July, but the Shadow Board still sees higher interest rates as appropriate for the coming year

There is a split of views amongst the NZIER Monetary Policy Shadow Board regarding the Official Cash Rate (OCR) at the upcoming July Monetary Policy Review. Shadow Board members, on balance of strength of view, recommend the Reserve Bank of New Zealand (RBNZ) keep the OCR unchanged at 2.25 percent in July. However, it has become a line-ball call in terms of whether the RBNZ should keep the OCR on hold or raise it by 25 basis points in the July meeting. Rising inflation was a key reason given by members who want the OCR moved back towards neutral sooner rather than later. There was a range of views on the effect of the oil price shock on inflation and the New Zealand economy over the next year.