By Rahul Trivedi
BENGALURU, May 22 (Reuters) – The Reserve Bank of New Zealand is expected to keep its key policy rate unchanged on Wednesday but a slim majority of economists in a Reuters poll now forecast one or more hikes by end-September as a global energy shock threatens to lift inflation expectations.
All but one of 29 economists surveyed May 18-22 expected policymakers to hold the official cash rate at 2.25% on May 27. Just over half, nearly 52%, predicted one or two rate hikes by the end of the third quarter.
That marks a shift from an April poll, when only eight of 30 economists expected borrowing costs to rise by end-September.
From this meeting, the central bank will publish individual votes cast by members of the monetary policy committee if they don’t reach consensus, aiming to enhance transparency and improve public understanding of its decisions.
Australia’s central bank, the RBNZ’s closest peer, has already raised interest rates three times this year after inflation proved more persistent than expected.
The change in view comes as war in the Middle East drags on, with oil prices above $100 per barrel for most of the past 2-1/2 months since it began.
“Our expectation is the Reserve Bank will start lifting interest rates from July … given the risks to the inflation outlook have gotten very skewed to the upside,” said Nick Tuffley, chief economist at ASB Bank.
“What they will be worrying about is inflation expectations lifting and remaining high and inflation starting to move beyond fuel pump prices and transport costs. If we start seeing inflation spreading into the service sector or wages, that’s much more worrying.”
Prices rose 3.1% last quarter, again breaching the top end of the RBNZ’s 1%-3% target range.
The RBNZ is set to raise rates 50 basis points in total to 2.75% by end-Q4, poll medians showed, with a final rise to 3.00% by end-Q1 2027.
About 75% of respondents, 20 of 27, predicted one or more rate rises this year, but there was no consensus on when.
Major banks, including ASB, ANZ, BNZ, Kiwibank and Westpac, were divided on the outlook beyond the May policy meeting.
Kiwibank expected just one rate hike by the end-March 2027, while ASB and BNZ forecast 100 basis points by then. ANZ predicted 75 basis points of hikes, and Westpac saw a steeper 125 basis points.
(Other stories from the Reuters global economic poll)
(Reporting by Rahul Trivedi; Polling by Pulkit Khanna and Veronica Khongwir; Editing by Vivek Mishra, Ross Finley and Kim Coghill)
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