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RBNZ Set To Hike Rates By 25 Bps In April & May
(RTTNews) - New Zealand's central bank is likely to spread out its interest rate hikes over the next few meetings amid softer than expected data, and rate cuts may be on the horizon before year-end, according to a Capital Economics economist. The Reserve Bank of New Zealand is set to raise rates by 75 basis points at the upcoming meeting on February 22, as policymakers signaled in November, Marcel Thieliant, the chief Asia-Pacific economist at the research firm, said.
"We are now forecasting two 25bp hikes in April and May rather than one 50bp hike in April," Thieliant said.
"And we still think that rate cuts will come on the agenda before year-end." Official data showed this week that the food price inflation slowed to 10.3 percent in January from 11.3 percent in December.
Read more: New Zealand To Enter Recession In 2023
The latest RBNZ survey revealed an easing in the two-year ahead inflation expectations in the first quarter to 3.30 percent from 3.62 percent in the fourth quarter.
In November, the New Zealand's central bank hiked its benchmark rate by a record 75 basis points to 4.25 percent, and signaled more tightening despite looming recession.
The bank has tightened its monetary policy by 400 basis points over the last nine consecutive meetings. The current OCR level is the highest since January 2009.
New Zeland's economy is expected to enter a recession this year.
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