RBNZ Set to Raise Interest Rate Again Amid Economic Recovery

The Reserve Bank of New Zealand (RBNZ) is set to raise its benchmark interest rate for a second consecutive time, and economists believe there will be at least one more increase in the coming months. The official cash rate (OCR) is expected to rise by 25 basis points to 2.75 percent.

Economists and financial markets are overwhelmingly in agreement that the RBNZ will raise the OCR, citing improved consumer and business sentiment, as well as a fall in oil prices, which point to a recovery in the economy.

However, some experts have expressed caution, arguing that the economy still needs more help. Kiwibank chief economist Jarrod Kerr has been vocal in his dissenting view, calling on the RBNZ to back off rate rises and allow the economy to grow.

The RBNZ's decision is expected to be announced at 2pm today, and markets are split between an October or December increase. Some forecasters see the OCR being raised to at least 3.25 percent by mid-next year, while others predict it may need to reach as high as 4 percent.