New Zealand Dollar: Inflation mounts while RBNZ postpones rate rises – Standard Chartered

2.75% was the OCR level unexpectedly retained by the RBNZ. Standard Chartered’s Bader Al Sarraf and Nicholas Chia note that the narrow 4-3 vote weighed on the New Zealand dollar, despite indications that further tightening remains likely. Rather than marking the end of the rate-hiking cycle, the bank sees the decision as a postponement. It forecasts 25bp increases in December and February, taking the OCR to 3.25%. A further hike in March remains possible if domestic inflation proves persistent.

4-3 RBNZ Hold Clouds 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.)