Indeed, Westpac said wholesale rate rises were behind its decision to lift its two-, three-, four- and five-year fixed mortgage rates by 30bps.
To offset this a little, it said it would cut its six-month advertised special rate by 20bps to 4.69% per annum – the lowest of the five biggest banks.
The OCR tends to affect banks’ shorter-term rates, while wholesale markets influence their longer-term rates.
Westpac is also lifting its two- to five-year term deposit and PIE fund rates by 30bps and its 12- and 18-month rates by 10bps.
The new Reserve Bank Governor Dr Anna Breman will have an opportunity to try to talk the market down – should she wish to do so – when she speaks to media over a breakfast on Wednesday morning.
The former interim Governor, Christian Hawkesby, declined this opportunity when the Herald interviewed him the day after the bank released its Monetary Policy Statement a fortnight ago and swap rates went in the opposite direction to the OCR.
Some commentators accused the Reserve Bank of bungling its communications at the time.
They were of the view mortgage rates needed to remain low to stimulate the sluggish economy.
They feared the market’s response would stymie the economic recovery.
The Reserve Bank is next due to review the OCR on February 18.
Westpac’s rate changes will take effect on Wednesday.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
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