The chances of a rate change at this meeting are very low, so forward-looking language and, above all, new economic projections will drive the market reaction. The November rate path showed a first hike only in 2Q27, but that assumed headline inflation falling to 2.2% in the second half of 2026. A revision higher in inflation numbers would make a strong case for bringing forward the expected rate hike.<\/p>\n
In our estimates, inflation will not fall below 2.4% at any point this year, and we currently expect a 1Q print around 2.7 to 2.8%, well above the RBNZ\u2019s 2.3% estimate. If the RBNZ staff are using similar assumptions, we could see a materially higher revision in inflation and the rate path.<\/p>\n
Even if that doesn\u2019t fully align with the roughly 40bp of tightening priced in for year\u2011end, simply signalling a first hike in 1Q27 would likely validate current market expectations, and could even prompt investors to price in a second hike for 2026. The recent move by neighbouring Australia to lift rates to 3.85% may also be adding a touch of marginal hawkish pressure.<\/p>\n","protected":false},"excerpt":{"rendered":"The chances of a rate change at this meeting are very low, so forward-looking language and, above all,…\n","protected":false},"author":2,"featured_media":484471,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-484470","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/484470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=484470"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/484470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/484471"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=484470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=484470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=484470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}