RBNZ Seen Hiking Rates in September Amid Persistent Inflation

The Reserve Bank of New Zealand (RBNZ) is expected to raise its Official Cash Rate (OCR) by 25 basis points to 2.75% in September, according to UOB Global Economics & Markets Research.

This change in forecast reflects persistent inflation at 4.1%, broad price increases, and the central bank's hawkish guidance, despite a soft labor market.

The RBNZ shift towards pre-emptive tightening is driven by concerns over inflation persistence and the Bank's earlier guidance that 'some further reduction in monetary stimulus is likely to be required.'

UOB expects only gradual further tightening, with policy remaining data dependent. The 25 basis point hike would reinforce the RBNZ's inflation-fighting credentials while maintaining flexibility for future meetings.