VIEW: Westpac Still Look For 25bp Hike Next Week

Westpac note that "the RBNZ doesn't treat surveys of expectations mechanically. Instead, they focus on a range of measures to help inform how strong the longer-term outlook for inflation is. And this latest survey, along with other recent data, indicate that medium-term inflation pressures are bubbling over. Today's survey indicates that New Zealand businesses expect strong inflation over the year ahead, consistent with strong domestic and international cost pressures. More importantly, they expect that inflation will remain strong for an extended period and that it will linger above the RBNZ's 2% target. That's very much in line with our own assessment. As we've been highlighting for some time, New Zealand isn't just dealing with temporary cost pressures. We're also seeing strong domestic demand. The combination of those factors is resulting in intense – and likely long lasting – inflation pressures."

• "We're already expecting a 25bp increase in the Official Cash Rate at next week's RBNZ policy decision. Today's result reinforces our expectations for a series of hikes in quick succession over the coming year. Today's result also adds to the chances of a 50bp move at some point. Even so, we continue to expect that a 25bp hike is more likely than a 50bp increase next week due to the ongoing headwinds from the Delta outbreak."