Kiwibank Warns RBNZ Against Further Rate Hikes

Kiwibank is urging the Reserve Bank of New Zealand (RBNZ) to pause further interest rate hikes, despite its economists expecting another increase next week. According to a report by 1News, the RBNZ lifted the official cash rate (OCR) from 2.25% to 2.50% in July and Kiwibank expects it to rise again to 2.75% next Wednesday.

Kiwibank's economists argue that monetary policy should remain 'stimulatory' for now to support the economy, citing rising unemployment, underemployment, subdued wage growth of around 2%, and weakness in the housing market as reasons for the RBNZ to avoid further tightening.

The bank also highlighted uncertainty caused by the war in the Middle East, saying businesses had delayed or cancelled projects while households had reduced spending. The economists said economic activity could have contracted during the June quarter.