According to the latest Reuters poll of economists, the Reserve Bank of New Zealand (RBNZ) is on track to deliver a 50 bps rate hike for the third meeting in a row when it meets next Wednesday.
A majority, 15 of 22, now expect the official cash rate (OCR) to reach 3.50% or higher by the end of this year, broadly in line with market pricing.
Over 90% of economists, 20 of 22, forecast the RBNZ will hike by 50 basis points to 2.50% at its July 13 meeting with only two saying 25 basis points.
If the majority view prevails, it would mark the most aggressive monetary policy tightening since the central bank introduced the OCR in March 1999.
Over 70% of respondents, 16 of 22, forecast another half-point hike at the August meeting, taking rates to 3.00%, three times where it was before the pandemic.
The latest poll has rates at 3.50% for all of next year, according to median forecasts. That is short of the RBNZ’s own expectations for rates to climb to 4.00% by the middle of next year.
The poll showed inflation was forecast to average 6.0% this year and ease to 2.8% in 2023.
New Zealand’s economy was expected to grow 2.3% in 2022 and 2023, a marked downgrade from 3.1% and 2.7% predicted in April. Only a few economists forecast an outright recession next year.