NZ Interest Rate Forecasts Diverge Amid Ongoing Tightening Cycle
New Zealand's Reserve Bank (RBNZ) has continued its tightening cycle, hiking interest rates to 2.75% last week. Major bank economists are largely in agreement on near-term moves but diverge significantly over where the peak interest rate will be reached.
The RBNZ's own projections suggest an interest rate of around 3% by December, and most banks concur with this target, although they differ on timing. BNZ expects a pause in October followed by a hike in December, citing overnight swap pricing that implies around 7bp of tightening by October.
ASB, however, remains committed to two more 25bp hikes this year, taking the OCR to 3.25% by year-end. Westpac's base case matches BNZ's sequencing but expects further increases in interest rates to reach 4% by September 2027.