New Zealand Dollar: RBNZ postpones rate hikes despite mounting inflation – Standard Chartered

The RBNZ’s unexpected decision to leave its OCR at 2.75%, following a narrow 4-3 vote, weighed on the New Zealand dollar even as the central bank signalled that further tightening remained likely, according to Standard Chartered’s Bader Al Sarraf and Nicholas Chia. Standard Chartered sees the pause as a postponement of rate rises, not the end of the hiking cycle. It forecasts 25bp increases in December and February, taking the OCR to 3.25%, and sees scope for a further rise in March should domestic inflation remain persistent.

NZD outlook softens as RBNZ unexpectedly holds rates

"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. Learn more.)