VIEW: Westpac: What Does Today’s CPI Result Mean For The RBNZ?

Westpac note that today’s CPI result “was stronger than the RBNZ’s latest published forecast for a 1.4% rise. However, since that number was published, the RBNZ had noted the upside risk for prices. Last week, when delivering its third consecutive 50bp hike, the RBNZ reaffirmed that they are planning to continue raising the cash rate to a level where they are confident that inflation will settle within the 1% to 3% target range. And with price pressures continuing to sizzle, there was nothing in today’s report to dissuade them from that course. Given the continuing and widespread strength in inflation pressures, we’re forecasting the RBNZ will deliver a fourth 50bp hike at the time of the August policy review. We expect that to be followed by 25bp hikes in both October and November, taking the OCR to a level of 3.50% by year’s end.”