The Reserve Bank is set to deliver another rise in the official cash rate (OCR) but the end to the aggressive series of interest rate hikes may be in sight.
A 25 basis point increase to 5 percent, a level last seen in December 2008 and the 11th in consecutive rise is regarded as a given by financial markets.
But the rise would be the smallest since the start of 2022, and might be taken as a sign the RBNZ was turning the corner in the fight against inflation, which sits stubbornly near a record high of 7.2 percent.
“The Reserve Bank is nearing the point at which it can ‘watch and wait’ as higher interest rates do their work, but for now it will leave the door open for further hikes,” Westpac chief economist Kelly Eckhold said.
The latest NZ Institute of Economic Research’s (NZIER) closely followed business confidence survey also offered more hints of a slowing economy and a softening of inflation pressures.
Its principal economist Christina Leung said the RBNZ could probably afford to stop after a hike this week.
and that the Monetary Policy Committee ‘remains determined to achieve its Monetary Policy Remit’.”
He expected a further 25 basis point rise in May to emphasise the RBNZ’s determination and just as importantly limit any expectations of rate cuts.
Tuffley expected rate cuts possibly around May next year depending how quickly inflation pressures eased.
Credit: radionz.co.nz
