The Reserve Bank of New Zealand is expected to keep its key policy rate unchanged at 2.25% on Wednesday. However, a slim majority of economists in a Reuters poll now forecast one or more hikes by end-September as a global energy shock threatens to lift inflation expectations.
All but one of 29 economists surveyed May 18-22 expected policymakers to hold the official cash rate at 2.25% on May 27. Just over half, nearly 52%, predicted one or two rate hikes by the end of the third quarter, a shift from an April poll when only eight of 30 expected a rise.
From this meeting, the central bank will publish individual votes cast by members of the monetary policy committee if they don’t reach consensus, aiming to enhance transparency.
Australia’s central bank has already raised rates three times this year. The war in the Middle East has kept oil prices above $100 per barrel for most of the past 2-1/2 months.
"Our expectation is the Reserve Bank will start lifting interest rates from July," said Nick Tuffley, chief economist at ASB Bank. "What they will be worrying about is inflation expectations lifting."
Prices rose 3.1% last quarter, again breaching the top end of the RBNZ’s 1%-3% target range. Poll medians show rates rising 50 basis points to 2.75% by end-Q4, with a final rise to 3.00% by end-Q1 2027.
