Expected OCR hike 'path of least resistance', says ANZ chief economist

Another big rate hike expected today would be the path of least resistance, says ANZ chief economist Sharon Zollner.

Market expectations are for the central bank to raise the official cash rate by 50 basis points - that's half a percent - taking it to 4.75 percent.

ANZ chief economist Sharon Zollner told Morning Report while there had been some debate, all of the analysts and market pricing was in consensus.

"I'd say that is the path of least resistance today," she said.

"We're picking another couple of 25 point hikes after that."

There was still enormous uncertainty about just how high it would go, Zollner said.

It was important to note this was despite the cyclone, not because of it, she said.

"At the end of the day, all monetary policy can do is boost or reduce demand in the economy and it's not clear how boosting demand and risking potentially reigniting the housing market, would help with the disaster recovery when New Zealand's obviously needing to divert resources into the affected regions."

The Reserve Bank was interested in whether there was spare capacity in the economy or if we were running too hot, she said.

"It could be that we're in the middle of a recession right now, because of the disruption to retail sales, to logging, to agricultural production, all of those things.

"But does that mean we're going to have disinflationary pressure? No, unfortunately not."

It was likely to be an inflationary shock, she said.

"The Reserve Bank will be hoping that they can look through that and not have to raise rates by more but the risk is, given the starting point, that they won't be able to do that."

For the monetary conditions, it wasn't the interest rate decision made on the day that was most important, "it's how they manage expectations for where interest rates are going to go in the future".

This was what would determine fixed mortgage rates, she said.