RBNZ Preview: Forecasts from six major banks, surprising with a double shot hike?

The Reserve Bank of New Zealand (RBNZ) is set to announce its interest rate decision on Wednesday, April 13 at 02:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of six major banks.  

The RBNZ is widely expected to increase the Official Cash Rate (OCR) by another 25bps from 1% to 1.25%. If the expectation is met, the central bank will hike rates for the fourth straight meeting. This meeting will not be followed by Governor Adrian Orr’s press conference.

ANZ

“We expect the RBNZ will raise the OCR 50bp to 1.50%. The RBNZ has a big job to do to rein in runaway inflation, and the sooner they rip into it, the lower the economic cost is likely to be. We think a 50bp hike poses mild upside risks for the NZD.”

Westpac

“We expect the RBNZ to raise the Official Cash Rate by another 25 basis points to 1.25%. As in February, it’s likely to be a tough call between a 25bp and a 50bp hike. That decision won’t be helped by the unusually light data flow between reviews. The data that we have had suggests that near-term inflation is a growing headache for businesses and households. But it also shows that monetary policy moves to date are getting the intended traction via the housing market. The RBNZ has given little guidance as to how it might view recent developments. But its decisions to date suggest to us that the hurdle for larger OCR hikes is quite high.”

TDS

“We now expect the RBNZ to hike 50bps at this week's MPR and at the May MPS vs our prior call for 25bps hikes for each meeting. The data demands more aggressive action. The Bank need not wait for data following the April meeting to confirm hiking by 50bps in May. We expect the RBNZ Board will conclude the upside risks to inflation from the Ukraine/Russia war surpass the downside risks to growth, warranting 50bps hikes. A weaker growth outlook is not an adequate reason for hiking less aggressively at this stage. Officials should tighten policy to slow growth sufficient to re-anchor inflation expectations.”

Standard Chartered

“We expect the RBNZ to hike the OCR by 25bps to 1.25% and maintain a hawkish stance. While we see a risk of a 50bps hike at this meeting, we maintain our view of a 25bps hike for the following reasons. First, uncertainty due to Omicron and the Ukraine crisis remains elevated and is weighing on sentiment; consumer confidence plummeted in February and business confidence remained negative in March. Second, there are concerns surrounding China’s growth outlook, with Shanghai in lockdown. Third, the RBNZ is likely to wait for more data before deciding on a higher 50bps hike.”

Danske Bank

“We see risks as tilted towards a 50bp rate hike given the global inflation pressures.”

Citibank

“RBNZ OCR Decision Citi forecast; +25bps to 1.25%, Previous; +25bps to 1.0%. We expect the MPC to lift the OCR by 25bps at the April 13 meeting to a level of 1.25% and to repeat the sentence from the February 23 policy statement that ‘the committee agreed that further removal of monetary policy stimulus is expected over time given the medium-term outlook for growth and employment, and the upside risks to inflation’. This is because the RBNZ remains concerned about inflation expectations rising above the target for longer and for employment to remain above its maximum sustainable level.”