RBNZ Stands Firm on Gradual Tightening Path

Reserve Bank of New Zealand Governor Anna Breman downplayed expectations of sharp repricing in interest rate futures following Wednesday's quarter point hike to 2.75%. She emphasized that policy remains accommodative, even after moving the OCR toward neutral.

Breman said she expects economic growth to strengthen and broaden from here, aligning with the Committee's more optimistic tone in its official statement earlier this week. The Governor noted that the OCR track is very similar to the projections published in May, suggesting little change in the bank's outlook.

The RBNZ chief acknowledged that a further OCR increase is likely but stressed that the timing remains highly uncertain. Breman emphasized that the Committee will assess the impact of hikes already delivered before deciding on further action, indicating a data-dependent approach rather than a preset tightening path.

She also dismissed any concerns about political interference in monetary policy, stating that the upcoming election does not factor into the Committee's decisions. This reassurance is aimed at maintaining the RBNZ's independence and confidence in its ability to manage the inflation and growth trade-off.