BNZ says a September RBNZ hike is effectively certain and that the central bank
will signal further tightening until the cash rate reaches or exceeds neutral;
RBNZ’s published implied peak is about 3.5%. BNZ’s baseline is 25bps hikes at
every meeting, taking the cash rate to 4.0% by May 2027. Downside risks include
a sharper slowdown from a potential El Niño-driven recession, election-related
delayed rebound and a broader global asset-price correction; upside risk is
structurally persistent inflation that may ignore policy moves. BNZ cites RBNZ’s
July wording that policy “may still need to further reduce monetary stimulus”
and expects inflation to remain above target through mid-2027, forecasting
Sep-quarter YoY CPI at 3.7% versus RBNZ’s 3.3%.
