RBNZ Review: Another 25bps
RBNZ hike rate by 25bps to 2.75% unanimously
The RBNZ hike rates by 25bps to 2.75% in the September meeting unanimously. It is widely expected as the overall inflationary pressure is rising and headline figure has long overshoot target range. However, the lack of changes in inflation expectation has disappointed hawks because it indicates no hawkish tilt in the future OCR path.
Some key takeaways:
No Change to Inflation Expectation: The RBNZ still see headline inflation to return with the target range in mid 2027 before reaching 2% in 2028. It is disappointing hawks for there will not be extra hikes. The RBNZ believes current inflationary spike is mostly transitory from the Middle East disruption, soft domestic demand will only pick up slowly.
Flexible Forward Guidance: The forward guidance "Future policy will depend on the Committee’s judgement of the balance of risks to medium-term inflation." indicates the RBNZs wait and see approach. Both towards tightening effect and Middle East development. It also shows there are in no rush to hike.