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Westpac Expects RBNZ to Hold OCR Unchanged at May Meeting, Sees Three Hikes by Year-End

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Westpac said it expects the Reserve Bank of New Zealand to leave the official cash rate (OCR) unchanged at its May 27 meeting, though it anticipates a vote on whether to hold or increase the OCR by 25 basis points to 2.5%, according to a Thursday report by the bank.

The bank said it expects the RBNZ to increase its terminal OCR forecast by about 20 basis points to around 3.2%, reflecting higher inflation expectations, while the December 2026 OCR forecast is expected to rise by about 40 to 50 basis points to around 2.8%, the report added.

Despite the expected upward revision to forecasts, Westpac said it remains comfortable there will be three 25-basis-point hikes by year-end, while noting that Westpac's Chief Economist Kelly Eckhold's personal view is that a hike at the May meeting would be justified by the inflation outlook, it added.

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