The Reserve Bank of New Zealand's (RBNZ) decision to raise borrowing costs was in line with expectations, but policymakers will want to see more evidence of the economic recovery's durability before committing to more hikes, Westpac said in a Wednesday note.
"We see this as an appropriately balanced statement," Westpac said after the central bank raised its official cash rate by 25 basis points to 2.75%.
Most of the central bank's board sees upside risks to inflation, which should keep the option for another hike "firmly on the table for the foreseeable future," Westpac said. It added that the monetary policy committee is still cautious about the strength and breadth of the economy.
Westpac continues to forecast a rate hold in October, followed by a hike at the central bank's last meeting of the year in December.