Danger OCR might need to be hiked in 2026

Westpac chief economist Kelly Eckhold says given the RBNZ expects to cut the OCR by a total of 0.75% over the next year, this represents an unusual degree of front-loading of the remaining easing cycle.

"The RBNZ has been unusually explicit about the size of the next move and seems to be setting a high bar for any deviation from the expected 0.50% cut in February."

Eckhold said that Orr has indicated he sees the 'neutral' OCR as likely in a 2.5-3.5% range, although the range implied by the RBNZ’s 'indicator suite' suggests a range of 2.9-3.6%.

“We suspect there are a range of views within the MPC on where the neutral OCR lies and the performance of the economy from here will be the deciding factor.