New Zealand's five major banks unanimously expect the RBNZ to raise the OCR by 25bp to 3% at today's meeting, but their forecasts for the peak rate range…
Since a 25-basis-point rate increase is nearly fully priced in, the kiwi dollar will likely respond to the Reserve Bank's forward guidance rather than the rate move itself. If the statement signals willingness for additional tightening, it would validate the aggressive rate paths expected by ASB and Westpac, pushing up shorter-term bond yields. In contrast, a "wait and see" tone, as Kiwibank predicts, would support ANZ's expectation of a pause and could reduce some of the market's pricing for a cycle peak. A divided vote could create volatility in either direction. Beyond this meeting, oil prices are the key swing factor: further increases in crude would exacerbate New Zealand's fuel-driven inflation and reinforce the case for rates of 3.5% or more. For traders in the AUD/NZD pair, there are two central bank meetings in succession, with the Reserve Bank of Australia set to decide on November 2 and 3.
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New Zealand's major banks agree on raising the OCR to 3% at today's meeting, but their post-hike paths span from ANZ's call for a pause to Westpac's projection of a 4% peak. Therefore, the RBNZ's statement will carry more weight than the rate decision itself.
All five of New Zealand's biggest banks expect the Reserve Bank to lift the official cash rate by 25 basis points to 3% at today's meeting, making it the third successive increase. However, the banks disagree on how many additional moves the central bank will need to make.
The rate announcement is scheduled for 14:00 New Zealand time (01:00 GMT Wednesday, 21:00 US Eastern Tuesday). Markets have baked in about a 90% chance of a hike, ASB reports, and BNz stated that a decision to keep rates unchanged would cause a significant surprise.
The agreement among the banks has strengthened over the last week. Prior to the September-quarter CPI figures, Westpac stood out by advocating a hold, but it now also anticipates a hike. Kiwibank, which argued in September that the economy was too fragile for more tightening, also expects a rate increase, though it predicts the RBNZ will accompany it with a "wait and see" message before pausing.
The banks' outlooks for rates diverge after the expected hike. ANZ has tentatively scheduled a pause in December, with chief economist Sharon Zollner calling 3% a more suitable level for the RBNZ to hold. ASB predicts additional rate increases in December and February, pushing the OCR to a peak of 3.5%, and it has raised its neutral rate estimate — the rate that neither stimulates nor restrains growth — to about 3.5%. BNZ stated the RBNZ should indicate that further tightening lies ahead. Westpac lays out the most aggressive path: increases in December and February to 3.5%, followed by further moves in June and September 2027 to a 4% peak. Westpac also noted that a split committee vote is highly likely.
The main drivers are oil and the exchange rate. Rising petrol costs and a depreciating kiwi have boosted the inflation forecast. Although annual inflation declined to 3.7% in the September quarter, the banks expect it to rise again to between 4.5% and 4.7% by the December quarter.
Today's gathering is a Monetary Policy Review, not a full Monetary Policy Statement, so it will not contain revised forecasts or a projected path for interest rates. As a result, the market will focus on the statement's tone, any cues about the next decision, and the voting breakdown. The decision also arrives 10 days before New Zealand's November 7 election, though Governor Anna Breman has stated that the election does not influence policy choices.
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