Westpac in New Zealand expects the RBNZ cash rate to reach 6% by August.
WPAC says:
- By mid-2024, it should be clear that inflation pressures have abated considerably, that the CPI is closer to 4% and that the probability of reaching 3% will become “more than a figment of an economist’s wild imagination.”
-
“As always, there are significant risks to these central projections – but we believe these remain to the upside in terms of continued inflation and therefore interest rates.”
-
“One of the main upside risks is the size and breadth of the migration cycle that we are now firmly within. We have included a reasonable assessment of what to expect but if a larger and longer-lasting migration cycle occurs, we expect the net demand effect on the economy and inflation to be larger and more consistent.”
-
But if inward migration leads to an early return to a solid housing market, Westpac said the resulting boost to consumption, investment and the labor market could really challenge the assumption that inflation expectations remain fixed on the 1-3 percent target range.
–
The RBNZ cash rate is currently 5.25%.
Upcoming meetings: