ANZ Predicts More Rate Hikes as Oil Prices Soar

ANZ economists have revised their outlook for the Official Cash Rate (OCR), expecting more rate hikes due to ongoing inflation risks. The main driver of this change is the sharp increase in crude oil prices, which has pushed the spot Dubai price by over 40% above the Reserve Bank's (RBNZ) assumption for the fourth quarter.

This rise in fuel prices will not only affect the cost of transportation but also contribute to higher import costs. The New Zealand dollar has also lost favor due to increased global risk aversion, further adding to the pressure on inflation.

The ANZ chief economist Sharon Zollner stated that there are three underlying reasons for expecting more aggressive rate hikes from the RBNZ. Firstly, the recovery in the domestic economy is stronger than anticipated, providing a solid foundation for further interest rate increases.