Weekly Economic Commentary

The RBNZ surprised markets with a 25bps hike to the Official Cash Rate to 2.50%. Westpac has subsequently brought forward its forecast for further hikes, projecting a terminal rate of 4% by September 2027.

Key Takeaways

• 1.The RBNZ raised the Official Cash Rate (OCR) by 25bps to 2.50%, a hawkish surprise relative to expectations of an 'on hold' decision.
• 2.Westpac expects two additional OCR hikes in 2026 (September and December) and an eventual peak of 4% by September 2027.
• 3.The New Zealand dollar (NZD/USD) saw a lift following the RBNZ decision, with risks skewed to the upside in the near term.

Table of Contents

• From nail-biter to head-scratcher.
• Key views
• Westpac GDP nowcasts
• Key data and event outlook
• A case for earlier tightening...
• ...but perhaps not yet?
• Where to next?
• Chart of the week.
• Fixed versus floating for mortgages.
• Global wrap
• Financial markets wrap
• The week ahead
• Economic and financial forecasts
• Data calendar

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