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2026-05-27 09:45:30
[Westpac Bank's Forecast of the Reserve Bank of New Zealand's Decision: Interest Rates Expected to Remain Unchanged at 2.25%, Inflation Exceeds 4%, Timing of Rate Hikes Remains Disagreement] (1) Westpac Bank stated that the market generally expects the Reserve Bank of New Zealand to maintain the Official Cash Rate (OCR) at 2.25% today. (2) Driven by soaring refined oil prices following the Iran war, New Zealand's overall inflation rate is expected to exceed 4% and remain high for most of 2026. (3) Economic growth forecasts are expected to be significantly lowered: GDP growth in 2026 is currently projected at 1.8%-2.0% (February forecast was 2.8%); the unemployment rate is expected to rise to approximately 5.5% by the end of the year. (4) The OCR terminal rate is projected to rise to approximately 3.2%, with a December 2026 rate forecast of approximately 2.8%, which means there will be two to three rate hikes this year. The core disagreement within the Monetary Policy Committee lies in the timing of rate hikes rather than their direction. (5) The bank believes that the reasons for maintaining the interest rate unchanged today include: limited hard evidence of the effects of a second round of inflation, high uncertainty about the duration of the war, and the possibility that tightening policy too early could be counterproductive if the economic slowdown deepens. (6) The second quarter CPI data will be the first substantive test of whether inflation is spreading from energy costs.
