Goldman Sachs reviews the RBNZ July policy meeting.

"The RBNZ raised the Official Cash Rate (OCR) by 25bp to 2.50% at the July meeting. The outcome was in line with our forecast, the majority of market economist forecasts (17 out of 23 expected a 25bp hike) and market pricing (+17bp). The decision was reached by consensus across the Monetary Policy Committee (MPC).  

Looking ahead, we lean towards another 25bp rate hike in September to 2.75%, given the MPC still judges policy to be accommodative and that the MPC on aggregate assesses inflation risks as skewed slightly to the upside. Over the medium term, however, we continue to expect the RBNZ to remain on hold at 2.75% as existing spare capacity in the New Zealand economy limits the indirect effects of the oil price shock and inflation undershoots the RBNZ's forecasts," GS notes.

"We remain constructive on NZD following the RBNZ decision, where markets appear to underappreciate the significance of the unanimous vote and the potential for further tightening," GS adds.