The tide is turning in favour of the Reserve Bank cutting official interest rates.
But there are wide differences on when it may happen - as soon as next month or not for a couple of years.
ANZ chief economist Cameron Bagrie said he now expected the Reserve Bank to cut by 25 basis points in June and cut again in July.
There was little point in waiting till the second half of the year before cutting rates to manage the "emerging economic risks".
"The official cash rate should be lower. Demand across the economy is solid yet the reality is that inflation has failed to show up at the growth party," Bagrie said.
Core inflation had been below the 2 per cent Reserve Bank target for 21 quarters in a row. That in itself was enough to justify rate cuts, Bagrie said.
ANZ had called for rate cuts because of a combination of a high New Zealand dollar, a squeeze on dairy farmer incomes, the Reserve Bank's expected moves to control housing by lending controls, and continued low inflation.
ANZ's latest monthly inflation gauge fell 0.2 per cent in April, with prices flat excluding housing. While prices rose 1 per cent in the past three months, excluding housing and government charges, prices rose just 0.1 per cent.
Meanwhile, Westpac Bank economists agree the Reserve Bank is expected to cut official interest rates, but put the chances of a cut this year at only 40 per cent .
Westpac chief economist Dominick Stephens said they had called the end of the central bank's "hiking cycle".
"We expect that the next move in the OCR will be down," he said.
But that was not because the economy was in trouble and a cut could still be years away, unless the economy faltered.
Westpac still expected a year of "full-bodied" economic growth ahead, expanding about 3 per cent this year and next. Surging domestic demand would outweigh the pain in parts of the agricultural sector.
But Westpac said it had long argued that the economy would run out of steam once the Canterbury earthquake rebuild started to fade. And the migration boom would start to fade when job markets overseas started to improve, so economic growth would start to slow from 2017.
"It now looks as though that inevitable slowdown will occur before inflation rises to levels requiring OCR hikes," Stephens said.
Inflation remained well contained so there was no need to lift rates.
Some in the financial markets suggested that rates could be cut this year, but Westpac only gave that a 40 per cent chance.
"We find it more likely that the Reserve Bank will wait until the rampant housing market has cooled and the economy has slowed before cutting the OCR," Stephens said.
And that could be years away, with Westpac picking a rate cut "most likely late in the decade".
Cutting rates this year would provoke an "unacceptable acceleration" in house price rises and would turbo-charge domestic demand.
"The housing market really is rampant in Auckland, and markedly slower elsewhere," he said.
Keeping official interest rates so low for so long did risk inflaming the already hot housing market.
The Reserve Bank was expected to use bank lending controls to deal with the overheated housing market. The Reserve Bank has indicated that restrictions aimed at landlords were in the pipeline.
"However, we suspect that these mortgage restrictions will dent rather than derail the house price steam train," Stephens said.
Westpac still expected house prices to keep rising strongly this year and next.
But the decision whether to keep rates on hold or cut was "finely balanced". And any sign of the economy faltering could tip the balance and push the Reserve Bank into cutting rates.
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