24 May 2023

Rate hike expected - households already in "world of pain"

From Nine To Noon, 9:05 am on 24 May 2023
Governor of the Reserve Bank Adrian Orr.

Governor of the Reserve Bank Adrian Orr. Photo: RNZ / Dom Thomas

Economists are united in the view that interest rates will be hiked again today by the Reserve Bank as it continues to battle inflation.

The majority are picking a 25 basis point rise to 5-point-5 percent, but a solid minority is picking a 50 point rise, citing higher than expected budget spending, and a surging numbers of immigrants.

So with the cash rate potentially rising as high as six percent by the middle of the year, what sort of pain is coming down the pipe for borrowers?

And what other choice does the Reserve Bank have today,  given stubbornly high inflation? David Cunningham is a former head of the Cooperative Bank, and CEO of mortgage broker Squirrel.

He says many borrowers are already facing a world of pain at the current cash rate, and he's imploring the Reserve Bank not to hike again. Kathryn also speaks with Infometrics Principal Economist Brad Olson.