RBNZ: Gradual hiking path from September – TD Securities

TD Securities’ Prashant Newnaha now expects the Reserve Bank of New Zealand (RBNZ) to start raising the Official Cash Rate (OCR) from the September 2026 meeting, having previously forecast the first move in February 2027. Newnaha anticipates a steady sequence of 25 bps hikes through February 2027, with the cash rate peaking at 3.25% and not moving above neutral.

Pre-emptive hikes seen as unlikely

"There has been a clear shift in the RBNZ's monetary policy thinking since the Feb RBNZ meeting."

"At the April meeting, the general discussion amongst Board members surrounded the timing of any increase in the OCR rather than whether any eventual increase is appropriate."

"Our new forecast is for the RBNZ to begin hiking from the Sep'26 meeting, bringing forward the first hike from Feb'27."

"The conditions for the Bank to deliver pre-emptive hikes have not been met, implying it's less likely the RBNZ hikes in May and/or July."

"Unless the RBNZ highlights a new set of conditions to hike pre-emptively, the Sep meeting is likely the first that the RBNZ can justify hiking."

"The risk to our cash rate call is for the RBNZ to begin hiking before the Sep meeting if it reveals a new set of conditions to hike preemptively."

"We expect the RBNZ to flag a steady series of 25bps hikes taking the cash rate to 3.25% by its Feb'27 meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)