New Zealand: RBNZ hikes rates to 2.00% - UOB

Lee Sue Ann, Economist at UOB Group, comments on the latest RBNZ event.

Key Takeaways

“In line with our and market expectations, the Reserve Bank of New Zealand (RBNZ) decided to raise its official cash rate (OCR) by 50bps to 2.00%. This is the first time the RBNZ has delivered back-to-back half-point increases since the OCR was introduced in 1999, and takes its accumulated amount of tightening to 175bps since Oct 2021.”

“The RBNZ clearly remains determined in containing inflation risks, stating that it remains appropriate to continue tightening monetary conditions at a pace to maintain price stability and support maximum sustainable employment.”

“There are four more monetary policy meetings for this year, with the next one on 13 Jul. Following the two back-to-back half-point increases, we expect the RBNZ to tune back to the more usual pace of 25bps hikes from Jul onwards as monetary policy tightening should get some traction by then, and amid likely evidence that demand will cool and the housing market will soften further.”