Predictions for next week's OCR announcement

While economists are agreed there will be a hold, Westpac has taken the bull by the horns and is predicting six OCR hikes next year as the excess capacity in the economy evaporates.

In its first Economic Outlook for the year, Westpac chief economist Kelly Eckhold says the OCR will begin to rise late this year, with the pace of policy tightening increasing in 2027 to return interest rates to neutral levels more quickly.

He says the OCR will likely rise above neutral, which the bank estimates to be 3.75%, in late 2027. “The time taken this year to gain confidence about the recovery implies a need for slightly restrictive conditions over 2028.”

An OCR peak of 4.25% looks likely to remain in place over 2028 before returning to neutral in 2029, Eckhold says.