RBNZ Monetary Policy Review

Sticking to the plan, keeping options open 

The RBNZ raised the OCR by 50bps to 3.50% today, as expected, maintaining that “it remains appropriate to continue to tighten monetary conditions at pace”. 

We continue to expect another 50bp hike at the November Monetary Policy Statement, with 25bp moves in each of the first three meetings of 2023, taking the OCR to a peak of 4.75%. 

We see risks on both sides of that. On the downside, current global market volatility could quickly turn into something uglier; on the upside, core inflation may not fall as fast or as far as projected. 

Interestingly, the Summary Record of Meeting showed the Committee discussed the merits of 50bps vs 75bps. That possibly reflects where the Committee see the skew of risks, and is a very different vibe to the RBA’s 25bp hike yesterday.

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