Westpac: Increasingly Likely That May Will See Last Hike In RBNZ Cycle

In the wake of Q1 CPI data Westpac write “we're forecasting another 25bp increase in the Official Cash Rate at the RBNZ's May policy meeting. Inflation is still running red-hot and it remains well outside the central bank's target range.”

• “However, it's looking increasingly likely that May will be the last rate hike in the current cycle. Inflation has fallen well short of the RBNZ's forecasts for a second quarter, and there are signs that underlying inflation pressures have peaked and may be starting to ease. Those developments come on top of softening demand in sectors such as construction. Together these are important indications that the policy tightening over the past 18 months is at last having the intended dampening effect.”