Next week, the Reserve Bank of New Zealand (RBNZ) hold its monetary policy meeting. Westpac analysts expect the central bank to hike 50 basis points next week, and to do so again at meetings in November and February.
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“With inflation risks escalating and domestic activity remaining resilient, another 50 basis point hike in the cash rate is on the cards for next Wednesday’s review.”
“Next week’s decision will not include a new set of forecasts, so any changes to the forecast path for the OCR will have to be conveyed verbally. We expect the RBNZ to repeat its recent language that it will continue to tighten monetary policy” by pace,” and can say that the Committee anticipates a higher OCR trajectory than projected in the August statement.”
“Markets have priced in the possibility of a 75 basis point hike, in line with large moves by other central banks such as the US Federal Reserve in recent months. We can’t rule it out entirely: with the OCR currently at 3%, our updated forecast implies another 150 basis points ahead, and no time to be complacent about that.”
“We have revised upwards our forecast for how far the Official Cash Rate will have to go in the Reserve Bank’s battle against inflation. We now expect a high of 4.5%, up from our previous forecast of 4%.”
Source: Fx Street
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