Credit Agricole CIB Research discusses its expectations for this week's RBNZ policy meeting.
"The RBNZ will raise rates on Wednesday, it is just a question of by how much – 25bp or 50bp. Despite lockdowns, employment and wages growth have accelerated in Q3 and unemployment has dipped to nearly a 15-year low. NZ real GDP growth in Q2 was four times the RBNZ’s forecasts. So the economy has significantly less spare capacity than the RBNZ expected," CACIB notes.
"While this would argue for a 50bp rate hike tomorrow, we think the RBNZ will hike by 25bp and forecast a more aggressive rate hike path to get the OCR back to neutral by end-2022 or early-2023," CACIB adds.