RBNZ Preview: Forecasts from five major banks, all eyes on future policy path

The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on Wednesday, August 17 at 02:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of five major banks.

The RBNZ is seen raising the Official Cash Rate (OCR) by 50 basis points (bps), lifting it from 2.5% to 3.0%. The policy announcement will be accompanied by the updated projections and followed by Governor Adrian Orr’s press conference.

ANZ

“We expect the RBNZ will raise the OCR 50 bps to 3.00%. We expect the Committee to strike a hawkish tone in its choice of words and its OCR track. Recent starting point surprises on domestic inflation and wage growth, as well as recent falls in domestic mortgage rates, give the Committee little choice but to send a clear message.”

Westpac

“We expect the RBNZ to raise the OCR by another 50 bps to 3%. The RBNZ is likely to maintain a similar path for its OCR projections, in contrast to financial markets which have moved to price in a lower peak for this cycle and an earlier start to interest rate cuts. Continuing to tighten monetary policy ‘at pace’ would send a message that while the fight against inflation is well underway, a declaration of victory is a long way off.” 

BofA

“We expect the RBNZ to deliver another 50 bps hike to lift the OCR to 3%. While policy guidance should remain hawkish in light of price pressures, there is risk the Bank may introduce more conditionality on the scale of subsequent policy front-loading. The quarterly Monetary Policy Statement should reflect both modest changes to the OCR track, and unveil softer growth and labour market forecasts. But signs of an inflation peak are not yet in sight.”

TDS

“We expect RBNZ to lift the OCR to 3%. Recent data suggest that the RBNZ's job is not done and near-term risks to inflation should dominate the Bank’s thinking. Updated economic forecasts and the new OCR path will garner market attention.”

ING

“We see some non-negligible risk that the RBNZ will have to revise its rate path projections lower. Even if the RBNZ hikes by 50 bps (as per our base case scenario and market expectations) the downside risks from a dovish repricing are quite material for the kiwi.”