Inflation expectations edge higher

Underlying this shift is a clear lift in inflation expectations. Westpac reports that “83% of clients expect inflation will remain above 2% in two years’ time, up from 76% at the time of our previous survey.”

More respondents now see inflation outcomes closer to 2.75%–3% in two years, consistent with the recent 3.1% annual CPI result and persistent core inflation pressures. Westpac points to a “rolling‑maul of price increases” in non‑discretionary areas such as council rates, insurance, and utilities, with further large rises expected over the coming year.

Separately, ASB and Westpac economists warn of an upward drift in New Zealand inflation expectations, edging further above the RBNZ’s 2% midpoint despite contained headline forecasts.

What matters most for RBNZ – and advisers’ strategy

When asked what could change RBNZ’s plans, clients overwhelmingly nominated domestic growth and labour market conditions as the key swing factors, with non‑tradables inflation next for local respondents. Offshore clients also highlighted commodity prices and the exchange rate.

For Kiwi mortgage advisers, the survey reinforces two themes: don’t position clients for rapid OCR cuts, and be ready to explain why sticky inflation, a resilient labour market, and global central bank moves – particularly a more aggressive RBA – may keep New Zealand interest rates elevated through 2026, even if the RBNZ remains on hold in the near term.