ANZ says Reserve Bank’s ‘biggest regret’ may be not raising OCR soon enough.

ANZ says the economy is rapidly approaching full employment and is tipping unemployment to drop from 4.7 per cent to what would be a 16-year low below 4 per cent by 2023.
Unemployment last sat below 4 per cent between 2004 and 2007, when it bottomed out at 3.66 per cent.
The countrys biggest bank has been scrabbling to upgrade its forecasts after what it described as a monstrous 1.6 per cent jump in GDP in the three months to the end of March, reported by Stats NZ in June.
The GDP jump prompted ANZ to predict the Official Cash Rate would rise in February, making it the most bullish of the bank forecasters.
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That remains its official forecast, but on Wednesday it raised the prospect that a rate hike might arrive even sooner because of falling unemployment and its expectation inflation will top at least 3 per cent.
There was a growing risk that the Reserve Banks biggest regret could soon be waiting too long to raise rates, it said on Thursday.
The strength of the economy was reflected in Crown accounts released by the Treasury on Thursday, which showed tax revenue for the 11 months to the end of May were $4.1 billion higher than forecast in the Budget.
Net core Crown debt was $101.5b, or 31.2 per cent of GDP, which was $6.9b lower than forecast in the Budget.
Abe de Wolde is seeking three more people to work on his dairy farms in 2ic positions but cannot find Kiwis to do the job.
With the labour market tightening and inflation rising, ANZ said it expected to see a sizeable increase in wage inflation over the period to 2023.
ANZ said it had seen a raft of stronger economic data from a range of sources since its last labour market forecast in May.
Job vacancies had risen way above pre-Covid levels in all industries and regions it tracked, with the total number of job vacancies well above previous record highs.
The border closure is a real constraint on labour supply that doesnt appear likely to be resolved any time soon, it said.
The Government has raked in $4.1 billion more in tax revenues in the 11 months to the end of May than was forecast in the Budget.
The Reserve Bank would probably prefer to wait for more evidence of a sustained recovery before raising rates, ANZ said.
But it said forecasting tools used by the central bank and others had not performed well globally, following the Covid pandemic.
We think part of the explanation lies in an initial under-appreciation of just how significant the accompanying supply shock has been, it said, referring to the impact the virus has had on supply chains.
The corollary of that is weve seen a lot more inflation pressure than was anticipated.