In other words, the RBNZ is likely to shift its forecast to suggest that the next move for the OCR is up.
Most economists believe it will do that gently, by moving the odds towards a rate rise in December. It had previously signalled February as the earliest date for a hike.
“We don’t think the RBNZ will be trying to scare the horses into pushing for an earlier start to tightening than markets have already priced,” said Westpac chief economist Kelly Eckhold.
“Hence, the RBNZ is more likely to opt for more dovish messaging than more hawkish messaging.”
It will be aiming to signal a strong chance of a December rise, and a follow-up rise in February next year, but not much more than that.
Market pricing has been implying a rate rise as early as September.
“It will be interesting to see how Governor Breman characterises the data during her debut against the NZ inflation dragon,” said ASB economist Wesley Tanuvasa.
“Her push for increased transparency may result in MPC members’ views being teased out more in the Record of Meeting, and we look forward to more openness as 2026 unfolds. RBNZ judgment on inflation will be pivotal.”
BNZ economists have forecast a September hike, in line with the market view, but head of research Stephen Toplis doesn’t expect the RBNZ to match that just yet.
“We believe the RBNZ will raise rates in September 2026 but, given current uncertainty, we do not predict it to express that intent at the upcoming meeting,” he said.
“We do expect it to acknowledge the pickup in growth and higher starting point for inflation, but to still express confidence that inflation will come back to the mid-point of the target band.”
Looking through the key data since November’s Monetary Policy Statement, Zollner highlighted the difficult balancing act the RBNZ faces.
“The RBNZ Monetary Policy Committee will likely be wary of a meaningful further tightening of monetary conditions at this stage, as it would risk killing off the nascent recovery.
“On the other hand, it is entirely appropriate for the RBNZ to pivot from signalling the odds of further cuts to signalling the potential timing of the first hike.”
Higher-than-anticipated CPI inflation wasn’t purely because of volatile components or administered prices (such as rates and electricity lines charges), although these hadn’t helped.
There were also worrying signs of a rise in core inflation.
“But with neither the labour market nor the housing market looking inflationary, there is still room for the RBNZ to ‘give growth a chance’, while keeping their options open,” she said.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
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