TD Securities analysts Prashant Newnaha and Howard Du project that the Reserve Bank of New Zealand (RBNZ) will raise the Official Cash Rate (OCR) by 25 basis points to 2.75% at the upcoming September meeting, a move that is already more than 90% priced in by the market and supported by current data trends [1]. The analysts anticipate that the decision will be reached by consensus among the six Monetary Policy Committee (MPC) voters [1].
According to TD Securities, the RBNZ's OCR track is expected to remain broadly unchanged from the May Monetary Policy Statement (MPS), with the OCR reaching 3% by the end of the year and peaking at a terminal rate of around 3.30% [1]. The forecast includes additional 25 basis point hikes in December 2026 and February 2027, which would bring the OCR to 3.25% [1].
The analysts note that the growth outlook is in line with the RBNZ's May forecasts, suggesting that the output gap projection is unlikely to have changed significantly [1]. As a result, there is no compelling case for the RBNZ to raise the OCR above the current 3.30% projection at this time [1]. However, they highlight the risk that the RBNZ could nudge its inflation forecasts higher in the future, potentially bringing forward or increasing the terminal OCR forecast, though not at the upcoming meeting [1].
Overall, the market implications point to a gradual and measured tightening path by the RBNZ, with no major surprises expected in the near term [1].
CONCLUSION
TD Securities expects the RBNZ to continue its gradual rate hike trajectory, with the OCR reaching 3% by year-end and a terminal rate of 3.30% by 2027. The market is largely aligned with this outlook, and no significant deviations from previous forecasts are anticipated at the upcoming meeting.