Banks are likely to introduce a hike in interest rates shortly after the Reserve Bank's decision to rise in the Official Cash Rate by 25 basis points touching 2.75%.
The decision prompted the New Zealand shares to close, marking a small rise Thursday, overlooking a negative cue from Wall Street. The benchmark NZX-50 closed, rising 0.1%, or 2.2 points, at 3002.33.
It is reported that a quarter percent hike in OCR by the central bank has consequently boosted the cost of borrowing.
In addition, exporters have reported to suffer from lowered profits, as the New Zealand dollar has already jumped since the OCR rise.
"It's too early. The market is by no manner of means showing positive strength across the board and indeed is very fragile", quoted, Bob Fenwick, Planhorse Systems Managing Director.
NZI Business presenter Corin Dann finds that it is highly probable that today's rise would be the first of many to be witnessed over the next two years, as the Reserve Bank keeps on altering the OCR.
According to forecasts made by the Reserve Bank today and current bank margins, floating mortgage rates could stand around 7.5% by this time next year prior to stabilizing at around 9% in two years, he adds.
