NZ Economy Resilience Supports October OCR Hike Predictions

New Zealand's GDP growth surprised economists in the June quarter, coming in at 0.2%, driven by construction.

ANZ senior economist Matthew Galt says this data, combined with global developments since the Reserve Bank's September Monetary Policy Statement, suggests a hike in the Official Cash Rate (OCR) is 'prudent' in October.

Galt notes oil prices have increased sharply, posing inflation risks, and the trade-weighted index, measuring the NZ dollar against major trading partners' currencies, is lower than assumed by the Reserve Bank.

BNZ head of research Stephen Toplis agrees, stating 'the Reserve Bank has no choice but to raise the cash rate 25 basis points in October.'