Australia & New Zealand Weekly

Latest edition · August 31, 2026

WestpacWeekly20260831

Westpac examines Australasian monetary policy, noting that while an upside surprise in Australia's July CPI increases the risk of a November RBA hike, it is not yet the base case. Meanwhile, the RBNZ is expected to hike the OCR to 2.75% in September and continue tightening toward 4.00% in 2027, supporting NZD appreciation.

In this weekly update, Westpac assesses the monetary policy outlooks for Australia and New Zealand. Australia's stronger July CPI (trimmed mean at 3.6% yr) elevates the risk of a November RBA cash rate hike, though split board decisions remain probable and policy transmission continues to operate primarily through short rates given Australia's 'short duration' variable-rate debt structure. In New Zealand, economic recovery is shaking off Middle East conflict disruptions, but persistent core inflation will push the RBNZ to raise the OCR to 3.00% by end-2026 and ~4.00% in 2027. Ahead of key Australian partials and Q2 GDP (forecast at 0.2% qtr), the report also outlines financial forecasts including an expected rise in NZD/USD toward 0.66 by late 2027.

Key takeaways from the latest edition

• 1.RBA rate hike odds for November have increased following an upside surprise in July CPI (headline at 3.5% yr, trimmed mean at 3.6% yr), but a hike is not yet Westpac's base case.
• 2.Australia operates as a 'short duration nation' due to tax policy, APRA capital regulations on IRRBB, and defined-contribution superannuation, making the short end of the yield curve much more critical to monetary policy transmission than the long end.
• 3.The RBNZ is expected to hike the Official Cash Rate by 25bp to 2.75% at its September meeting, with rates projected to reach 3.00% by end-2026 and ~4.00% in 2027 to combat persistent core inflation.

What this series covers

• Economic Insight: Hike odds have risen, but not odds-on
• Short duration nation
• The Week That Was: Cliff Notes: deciphering signal from noise in real time
• Focus on New Zealand: Shaking it off
• What to watch
• Looking Further Ahead: Economic & financial forecasts
• Corporate Directory

Edition archive

• WestpacWeekly20260831

  August 31, 2026

• WestpacWeekly20260817

  August 17, 2026

• WestpacWeekly20260629

  June 29, 2026