RBNZ Interest Rate Hike Expected on September 2 as Inflation Pressures Persist
The Reserve Bank of New Zealand (RBNZ) is expected to raise interest rates for a second consecutive meeting on September 2, according to a Reuters poll. A strong majority of economists, 90% or 27 out of 31, surveyed between August 20 and 27 expect the RBNZ to increase the official cash rate by 25 basis points to 2.75%. The move itself carries little surprise value, keeping focus on the pace and scale of further tightening.
The economists polled do not expect inflation to return to its 1%-3% target range this year, citing upward pressure on energy prices. One analyst cited in the poll said the main rationale for continued hiking is that inflation remains above target, and the RBNZ is uncomfortable being as far below neutral as it currently sits.
New Zealand's neutral interest rate is generally estimated at around 3.00% to 3.25%. Two-thirds of economists polled expect the RBNZ to raise rates again by at least 25 basis points next quarter, with a median year-end forecast of 3.00%. Forecasts for end-2027 range widely from 2.50% to 4.00%, with some major New Zealand banks holding more hawkish views than the broader panel.
The housing market is expected to be affected by higher rates, with home prices seen broadly flat this year before a 3% rise in 2027. The economy is showing tentative signs of recovery, having likely contracted 0.1% last quarter but forecasted to grow 0.4% in the current quarter.