OCR Hike Looms as RBNZ Eyes 2.75% Cash Rate

New Zealand's mortgage market is bracing for another official cash rate hike as economists near-unanimous that the Reserve Bank will lift the OCR to 2.75% at its September Monetary Policy Statement.

The RBNZ's Q3 Business Inflation Expectations Survey showed a broad-based improvement, with businesses' one-year-ahead inflation expectations falling from 3.68% to 2.99%, edging back within the central bank's 1-3% target band for the first time in some months.

Kiwibank economists noted that this reading is 'comically close to the Reserve Bank's 3% upper limit of its target band.'

Despite this, market pricing has a 25-basis-point September hike at roughly 95% certainty, with a cumulative 55 basis points of hikes priced in by year end, taking the OCR to around 3.05%.