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The Reserve Bank of New Zealand is expected to lift interest rates more than one percentage by September 2023 as businesses' short term inflation expectations continued to rise, according to the central bank's Survey of Expectations released on Tuesday.
The survey showed the Official Cash Rate was expected to be hiked by 65bp to 4.15% by the end of this year - compared to 3% in last quarter's survey - before increasing to 4.67% by September 2023, well up from 3.54% in the prior survey. The current OCR is 3.5%.
The rate path trajectory reflects expectations that inflation will remain above the RBNZ's 1% to 3% target band. The survey showed one-year inflation expectations rose to 5.08%, up from 4.86% in last quarter's survey, and two-year expectations increased to 3.62% from 3.07% previously. Five and ten-year inflation expectations remain within the central bank's inflation band.
Eight consecutive interest rate hikes - and the prospects of another 75bp at its November 23 meeting - have steered one-year GDP growth expectations down to 1.27% from 1.49% seen in the previous quarter.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.