VIEW: Westpac See 3x RBNZ OCR Hikes In '21

Westpac expect that the RBNZ "will increase the cash rate by 0.25 ppts at the time of the August Monetary Policy Statement, and that this will be followed by 0.25 ppt increases at both the October review and at the November Monetary Policy Statement. Underlying our expectations for this sequence of rate hikes are signs of solid momentum in domestic economic activity, as well as a strong increase in inflation pressures. Last Wednesday's announcement from the RBNZ highlighted that the central bank is ready and willing to adjust policy settings as economic conditions dictate. It also showed that they are ready to adjust policy at 'Review' meetings (not just when they release 'Monetary Policy Statements'). We think that today's CPI result, along with other recent developments will see the RBNZ revising up their assessment of medium-term inflation pressures. That means OCR hikes are also likely to come faster."