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Kiwibank First to Make Post-OCR Rate Change
Economists expect the bank to signal rate hikes later this year as it weighs inflation risks from the oil price shock.
- On Wednesday, the Reserve Bank of New Zealand held the Official Cash Rate at 2.25% when releasing its Monetary Policy Statement, which includes first full economic forecasts since the Iran war delivered an oil price shock in March.
- The Iran war's oil price shock created extreme forecasting challenges for the committee, with BNZ's Stephen Toplis posing the critical question: "Will the inflation shock take on an air of permanence?" without knowing when the war ends or oil production meets demand.
- Governor Anna Breman presented three alternative scenarios based on May 21 oil futures; in the first, firms and workers pass costs into prices and wages requiring larger rate increases, while in the second, absorbed costs could push inflation below the target midpoint.
- Economists widely expect the RBNZ to begin lifting rates in July, with ANZ chief economist Sharon Zollner confirming her expectation of 25-basis-point increases in July and "very likely in September and October as well."
- Beyond those hikes, the RBNZ's current best pick is one more increase to 3.25%, though Breman stressed many possible paths remain open given ongoing uncertainty around the Iran war and oil prices.
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NZ central bank holds rates steady in tight vote
New Zealand's central bank holds rates steady, but a split vote underscores a knife-edge decision, as policymakers warn rates will need to rise sooner and by more than expected to counter an energy shock rippling through the global economy.
·Malaysia
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Coverage Details
Total News Sources11
Leaning Left1Leaning Right2Center3Last UpdatedBias Distribution50% Center
Bias Distribution
- 50% of the sources are Center
50% Center
L 17%
C 50%
R 33%
Factuality
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