New Zealand Dollar: RBNZ set for second hike – BNY

BNY’s Geoff Yu expects the Reserve Bank of New Zealand to deliver another 25bp hike to 2.75%, supported by elevated inflation and strong confidence data. Markets will focus on updated macro forecasts and the Official Cash Rate track, with the RBNZ previously projecting 3.0% by Q1 2027 and a gradual rise to 3.3%, while pricing now implies around 3.25% by March 2027.

OCR path to guide Kiwi outlook

"The RBNZ decision on Wednesday provides the most immediate example, with another hike expected as New Zealand confronts inflation above target despite uneven domestic growth."

"That contrasts sharply with economies where policymakers are still trying to preserve momentum or lean more on signs of labor market softening."

"We expect the RBNZ to deliver a second consecutive 25bp rate hike to 2.75%, supported by elevated inflation and a sharp rebound in business and consumer confidence."

"In May, the RBNZ projected the OCR to reach 3.0% by Q1 2027 and gradually rise to 3.3% over the medium term, while markets now price around 3.25% by March 2027."

"Focus will be on the updated macroeconomic forecasts and Official Cash Rate (OCR) track for guidance on the pace of further tightening."

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