The Reserve Bank of New Zealand (RBNZ) will announce its monetary policy decision on Wednesday, October 6 at 02:00 GMT, and as we get closer to the release time, here are the forecasts by the economists and researchers of seven major banks ahead of the much-awaited monetary policy announcement. The RBNZ is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) from a record low of 0.25% to 0.50%.

In the view of FXStreet’s Dhwani Mehta, NZD/USD could rebound on hawkish forward guidance.


“We expect the RBNZ will raise the Official Cash Rate (OCR) 25bp to 0.50%. This is a relatively high conviction view – we view both a 50bp hike or an on-hold decision as unlikely, barring unexpected dramatic developments. Risks around our overall rate track are skewed in the direction of the RBNZ not delivering a full suite of hikes before trouble strikes. However, with global inflation pressures intense, risks are certainly not one-sided.”


“We expect the RBNZ to lift the OCR by 25 basis points to 0.50%. The latest covid lockdown delayed the RBNZ’s plans in August, but doesn’t fundamentally alter the pressures that the RBNZ is facing. Strong demand and growing inflation pressures mean that ultra-low interest rates are no longer needed. The case for a larger move hasn’t been ruled out, with the economy coming from a much stronger starting point than was expected in August. But the lingering risks around the Delta variant argue for a cautious approach for now.”

Standard Chartered

“We expect the central bank to hike the official cash rate (OCR) by 25bps to 0.5% after maintaining the status quo in August due to a fresh outbreak of COVID infections. Q2 GDP expanded four times as fast as the RBNZ’s forecast and revisions to historical data suggest that economic activity returned to pre-COVID levels in Q3-2020. While Q3-2021 GDP is likely to contract due to reimposition of restrictions, we think the RBNZ expects a strong rebound thereafter, with demand having proven more resilient than expected after the initial lockdown in 2020. COVID cases have eased since the start of September, although there has been a mild pick-up in recent days; a reimposition of stricter restrictions may risk another delay in rate hikes, although this is not our base case. An expected strong rebound and higher vaccination rates (44% fully vaccinated; 33% partially vaccinated) should allow the RBNZ to proceed with a 25bps hike.”


“We expect 1) a 25bps RBNZ hike at the MPR meeting, 2) for the LSAP to remain on pause and 3) FLP retained. We expect the Bank to adopt a measured approach to hikes as COVID uncertainties linger. The biggest surprise would be the Bank NOT hiking, given inflation is well above target, employment is at or above max sustainable levels, and growth is well above potential.”


“While a 25 bp hike was fully priced in as recently as late September, the odds have steadily fallen and WIRP now suggests about 80% chance for a hike. We think yet another U-turn by the RBNZ would be extremely harmful for market sentiment. Instead, the bank should deliver the 25 bp hike and at the same push back against market expectations for two more subsequent hikes at the November and February meetings.”

Danske Bank

“We expect the RBNZ to hike rates by 25bp, market prices around 85% probability of a hike.”


“We fully expect the MPC to announce a 25bp lift in the OCR. The risk is whether RBNZ starts the first OCR hike since July 2014 with a +50bp move – we view this as unlikely as leading with a +50bps move at this time creates more risk of a policy error compared to a smaller OCR increase. We expect the accompanying policy statement to conclude with a reference to the speed and extent to which the OCR will be raised will depend on the continuing assessment of emerging inflation and economic data consistent with meeting the inflation and employment remit. But having led so far in a hawkish direction to date, we do not expect the October statement to tilt towards more dovish guidance.” 


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