The Reserve Bank of New Zealand (RBNZ) is expected to increase the official cash rate by 25 basis points to 2.75% at its Sept. 2 meeting in a consensus decision, according to a note on Wednesday by Westpac.
The RBNZ's projections are likely to imply a 3% official cash rate by the year-end, with the rate expected to peak at around 3.3%. The central bank will likely signal that future moves are data-dependent.
The data that has become available since the central bank's projections in May implies a modest downward adjustment to its rate forecasts, given the lower energy prices and inflation expectations. However, plenty of risks remain.
If the RBNZ raised its neutral official cash rate assumption, then this would increase the chance of a hawkish scenario, where the central bank seems firmly resolved to continue to raise the OCR in October and onward.