ANZ Bank now sees cash rate peaking at 3%

“Assuming no abrupt developments such as a sharp re-pricing of risk globally (which we consider a very real risk, albeit an unforecastable one), we now believe the RBNZ will need to keep on hiking right on through our previous forecast of 2%,” said chief economist Sharon Zollner.

The official cash rate (OCR) is currently at 0.75%. The next cash rate review is on Feb 23, when the Reserve Bank of New Zealand (RBNZ) will publish a full monetary policy statement with forecasts.

“We now see a peak in the OCR of 3%, with the RBNZ raising in steady 25bps steps to get there,” she said.

According to Zollner, next week’s fourth-quarter inflation print could be closer to 6% or higher than the 5.5% that she had been expecting.