RBNZ Preview – Raising Rate as Least Regrets Option - NewsBreak

The market has priced in a 25 bps hike, bringing the OCR to 0.5%, at this week's RBNZ meeting. Much stronger-than-expected economic recovery since the last meeting, the rapidly rising inflation and inflation expectations, and a better job market are the key reasons for the rate increase. Signs of overheating have heightened, making a rate hike probably the "least regret" option for the central bank for the current situation. Since the action has been priced in, the focus of the meeting would be the forward guidance on further tightening, i.e. how many more hikes are anticipated by the central bank.