RBNZ raises the Official Cash Rate by 50bps to 4.75% as widely expected. It also maintained hawkish bias and noted, “monetary conditions need to tighten further”.
Regarding cyclone Gabrielle, it’s “too early to accurately assess the monetary policy implications”.. The committee will also “look through” the “short-term output variations and direct price effects” related to the weather event.
In the economic projections, RBNZ sees OCR peaking at 5.5% in Q4 2023, and stays above 5% until Q1 2025. GDP is projected to contract in Q2, Q3 and Q4 this year. Inflation is projected to drop gradually from 7.3% in Q1, but only falls back below 3% in Q3 2024.
In the post meeting press conference, RBNZ Governor Adrian Orr said that all options remain on the table today, “including 25, 50 and 75 bps hikes.” There was “very little discussion of a 25bp rate hike”, while “most focus was on 50bp”.
