New Zealand Dollar: RBNZ defers hikes as inflation builds – Standard Chartered

Standard Chartered’s Bader Al Sarraf and Nicholas Chia note that the RBNZ unexpectedly held its OCR at 2.75% in a narrow 4-3 vote, weighing on the New Zealand dollar despite signals that further tightening remains likely. The bank views the decision as a delay rather than an end to the hiking cycle, forecasting 25bp increases in December and February to bring the OCR to 3.25%, with an additional March hike possible if domestic inflation proves persistent.

RBNZ surprise hold weakens NZD outlook

"The Reserve Bank of New Zealand (RBNZ) held the official cash rate (OCR) at 2.75%, contrary to our forecast of a 25bps hike."

"The 4-3 vote implies the decision was less dovish than the headline suggests: three members favoured a hike, while all seven agreed that further policy tightening was likely required, conditional on the outlook."

"Overall, we believe that the RBNZ chose to defer policy hikes rather than call an end to the cycle."

"We now see 25bps hikes each in December and February, which revises our OCR forecast to 3.25% as of end-2027; we previously expected a hold and OCR at 3.00%."

"We see risk of an additional hike in March if domestic inflation proves more persistent than we expect."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)