27 May 2015

Interest rates tipped to stay steady

10:21 am on 27 May 2015

The New Zealand Institute of Economic Research (NZIER) expects interest rates to stay on hold until mid-2017.

A bundle of New Zealand money.

Photo: RNZ / Alexander Robertson

It is predicting that economic growth will create 130,000 additional jobs over the next two years but that wage growth will be muted at about 2.5 percent, partly because immigration has boosted the size of the workforce.

The institute said challenges include the dairy price drop, an Auckland housing market vulnerable to a sharp downturn in prices and a slowdown in the Christchurch rebuild, which is close to wrapping up.

It said, with low inflation and an uncertain global outlook, it would normally expect the Reserve Bank to cut interest rates but that could put added pressure on the Auckland housing market.