RBNZ Raises Official Cash Rate by 25 Basis Points

The Reserve Bank of New Zealand (RBNZ) has increased its official cash rate by 25 basis points to 2.75%, matching a similar-sized rise in July.

This move was widely anticipated by economists, who expect the RBNZ to continue gradually removing monetary stimulus to combat inflation.

The Monetary Policy Committee stated that while global events pose risks to recovery and tackling inflation, it is still possible for inflation to hit the 2% target by the end of 2027. The committee also noted that higher fuel prices will drop out of the annual inflation calculation soon.

Economists Jarrod Kerr from Kiwibank and Mark Smith from ASB expressed differing views on the future rate hikes, with Kerr expecting one more rise to 3% by year end and a prolonged pause, while Smith forecasted two hikes this year and more next year.