Westpac predicts OCR will be put on hold

The bank's team of economists, led by Dominick Stephens, believe the OCR will be held at 1% due to an improved outlook on inflation, employment and the housing market.

In a new report the bank says: "The balance of recent domestic data does not justify a cut, global sentiment has improved, and overseas central banks have indicated they will pause."

The bank previously expected a "rash of downside surprises" to prompt a November cut. 

Westpac believes the central bank will imply a 50/50 chance of a future rate cut as it makes its monetary policy statement next week. 

The Westpac economists predict a further cut will arrive in February.

"We still expect the RBNZ to cut the OCR to 0.75%, but we now expect that will occur in February next year. By that stage, we forecast that the current phase of improving global market sentiment will have given way to renewed uncertainty, particularly as the US presidential election race heats up."

Westpac's prediction comes as the world's most influential central bank, the US Federal Reserve, cut interest rates today. The Fed cut rates for a third time this year yesterday, but signalled it was unlikely to make further reductions.