RBNZ Preview – Rate Hike Cycle Begins - NewsBreak

The RBNZ is almost certain to raise the OCR by +25 bps to 0.5% next week. The Funding-For-Lending program (FLP) will stay unchanged at NZ$28B. This should not be affected by the slowdown in economic activities in the third quarter. While cautioning about the uncertainty of the pandemic and economic damage brought about by the lockdown, policymakers should still see a rate hike the option of "least regret". The upside surprise in 2Q21 GDP growth, continued inflation strength and the resilient job market are supportive of the move. Forward guidance of the future rate hike path would be closely watched.