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The Reserve Bank of New Zealand (RBNZ) may hike the Official Cash Rate (OCR) to 6% at its upcoming meetings in February and April.

This is according to the chief economist at ANZ New Zealand, Sharon Zollner.

Within a note published on Friday, the head economist at New Zealand's largest retail bank said a number of "small but unwelcome surprises" was sufficient to resume the rate hiking cycle, Interest reports.

Such factors include marginally higher non-tradable inflation, robust consumption growth and greater resilience than forecast within the country's labour market.

"None of them are game changers, but given the starting point was the RBNZ already very nearly over the line to hike again, no game changers are needed," Zollner stated.

In addition, there were other capacity pressure indicators in other economic surveys and high-frequency economic activity data. 

Indeed, a recovery in commodity prices, strong net migration and a fall in wholesale interest rates were additional motives for the RBNZ to hike rates further.

Zollner said there was a "pretty long list" of hawkish developments that could lead to a higher OCR track than in the Monetary Policy Statement in November.

The update from November indicated the central bank's Monetary Policy Committee may increase rates again should there be a delay to inflation reverting to target.

"Indeed, their OCR forecast peak of 5.69% implied that the burden of proof was now on finding reasons not to hike, strictly speaking". 

Zollner added that restarting the hiking cycle solely for a 25-basis point increase isn't justified, implying that there's a higher likelihood of two hikes happening rather than none. As it stands, the OCR is at 5.50%.

However, according to Westpac NZ chief economist, Kelly Eckhold, market forecasts of another rate rise were "overdone."

He is of the opinion that the new data mean rates will remain at 5.50% until 2025, as the RBNZ "squeezes sticky inflation out of the economy."



  • Reserve Bank of New Zealand (RBNZ),
  • Official Cash Rate (OCR)

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