RBNZ Hikes OCR Amid Rising Unemployment and High Inflation

The Reserve Bank of New Zealand (RBNZ) has raised the Official Cash Rate (OCR) amid rising unemployment, sparking criticism from the New Zealand Council of Trade Unions (NZCTU). NZCTU president Sandra Grey expressed strong disapproval, stating, “The OCR hike today is not what this country needs.”

However, RBNZ Governor Anna Breman emphasized the need to prioritize inflation control, citing an inflation rate of 4.1%, significantly above the target band of 1-3%. Market responses indicate that this hike was anticipated, with expectations for one or two additional increases later this year.

Financial markets have not priced in another rate hike until March of the following year. ANZ markets strategist David Croy noted that the RBNZ's latest forecasts appeared to be more dovish than market participants had expected.