Economists say the RBNZ will need to hike sharply to rein in a rebound in
inflation, even if that requires action 10 days before the election. Q3 CPI
eased slightly, but most analysts expect Q4 inflation to accelerate above 4% and
remain above the RBNZ’s 1–3% target for longer than the bank had projected.
Rising fuel prices and a weaker NZD are the main upside pressures. Most
economists expect the official cash rate to be raised to 3% next Wednesday (Oct.
28). ASB senior economist Smith warns sustained higher inflation is a major
problem, forecasts CPI above 3% until Q4 2027, and expects the RBNZ on Oct. 28
to acknowledge more work is needed and to retain a conditional bias to tighten
further.
