ANZ previewing the RBNZ next week, and beyond:
- April Monetary Policy Review (MPR). We continue to expect they will lift the OCR by 50bps next week
- and again in May
- and then continue in 25bp increments at each meeting until the OCR reaches a peak of 3.5% in April 2023
ANZ on New Zealand inflation:
- risks abound. On the inflation side of the ledger, inflation expectations have continued their worrying grind upwards. In our March Business Outlook, a net 96% of firms expected higher costs in the next three months, and both pricing intentions and inflation expectations continued to rise to, or close to, record highs.
- Plus, global inflation pressures are only continuing to surprise to the upside
- The Russian invasion of Ukraine has triggered immense commodity price volatility, but overall, prices are well up on this time last year.
- With key cities in China entering new lockdowns as COVID cases rise, that could also see further shipping disruptions – adding to imported inflation in New Zealand.
And add this worry for the RBNZ:
- Unfortunately, even as inflation has continued to build, the growth outlook has continued to weaken. Business and consumer confidence both soured markedly at the start of 2022, and supply disruptions mean whatever growth the domestic economy achieves this year will be hard won.
The bottom line though ...
- But none of that gives the RBNZ reason to hold back on interest rate hikes.
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The Reserve Bank of New Zealand policy decision is due on 13 April at 0200 GMT.
