RBNZ May Push OCR Higher Despite Dip in Inflation

The Reserve Bank of New Zealand (RBNZ) may still push the Official Cash Rate (OCR) back up to neutral in the coming months, despite a slight dip in inflation. Inflation rose to 4.1% in Q2, driven partly by petrol prices, which accounted for around a quarter of the latest annual rise in the Consumer Price Index (CPI).

The RBNZ has been steadily pushing the OCR up to counter rising inflation, and another rise in September still seems likely. This could mean higher mortgage rates for homeowners.

Rent inflation has recently fallen to a multi-decade low, with the balance between physical housing supply and demand having balanced out somewhat. However, net migration is slowly edging higher again, which may lead to rising rents in the future.