RBNZ to hike rates one last time by 25 bps on May 24 – Reuters poll

“The Reserve Bank of New Zealand (RBNZ) will hike interest rates by a final quarter point on Wednesday then end its most aggressive tightening cycle since adopting the cash rate in 1999,” according to a Reuters poll of 25 economists conducted during May 15-18 period.

The survey also shows that economists expect RBNZ to adopt a pause until year-end.

Key findings

Over 80% of economists, 21 of 25, polled on May 15-18, expected the RBNZ to raise its Official Cash Rate (OCR) y 25 bps to 5.50% at its May 24 meeting, on par with the central bank's projected peak rate.

The remaining four expected no change in the survey, conducted before the budget.

Among economists who had a long-term view, 14 of 21 forecast rates to stay at 5.50% next quarter. Of the others, four saw rates at 5.75% or higher and three at 5.25%.

Median forecasts showed rates at 5.50% until end-2023 but nearly 30% of respondents predicted at least one 25 bps cut by then.

Inflation was not expected to fall within the RBNZ's target range of 1-3% until the second half of 2024, a separate Reuters poll showed.

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