VIEW: Westpac Continue To Play Down Need For 50bp Rate Hike

In the wake of the release of today’s RBNZ inflation expectations data, Westpac note that “today’s result reinforces the case for rate hikes from the RBNZ. We’re forecasting as series of rate hikes over the coming year. Markets are pricing in a chance of a 50bp increase in the near term. But while today’s result does highlight the strong inflation pressures that the economy is grappling with, we still think a 50bp move is unlikely. The economy is still facing considerable headwinds, most notably disruptions related to Covid. As a result, we expect the RBNZ will adjust policy in a series of measured 25bp steps.”