NZ Central Bank Set to Hike Interest Rates Again in September

New Zealand's central bank is poised to raise interest rates for the second time this year. Westpac, one of the country's largest banks, expects the Reserve Bank of New Zealand (RBNZ) to lift the official cash rate by 0.25 percentage points to 2.75% at its September 2nd meeting.

The move is widely expected, but the RBNZ's forecasts and tone will be crucial for borrowers and savers. Westpac believes policymakers will still show a path toward roughly 3% by year-end, with a peak near 3.3%, despite stressing that future decisions are 'data-dependent'. Some recent signs suggest a slightly lower track, including cheaper energy and softer inflation expectations.

The key variable is the RBNZ's estimate of the 'neutral' cash rate, the level that neither speeds up nor slows down the economy. If the RBNZ marks this up, markets may price in more hikes beyond September.