29 Jan 2014

NZIER body backs Thursday for interest rate hike

7:12 am on 29 January 2014

The New Zealand Institute of Economic Research's shadow central bank board thinks the Reserve Bank should raise interest rates on Thursday.

Senior economist and head of public good research at the institute, Kirdan Lees, says it's a knife-edge call, but most of the nine members of the shadow board think the Reserve Bank should raise its official cash rate by 25 basis points to 2.75 percent.

He says the economy is building up its own steam, business confidence is soaring and consumers are ready to spend, so the economy no longer needs the support of low interest rates to the same extent.

Mr Lees says there are reasons to wait until March but they tend to be communication reasons.

He says in March the Governor Graeme Wheeler would have the availability of a media conference, a full monetary policy statement and he would be able to give testimony to the Financial and Expenditure Committee if he wanted to clarify any of his key messages.