Westpac in New Zealand are forecasting the Reserve Bank of New Zealand cash rate target to 6% by August.
WPAC say:
- by mid-2024 it should be clearer that inflation pressures have substantially moderated, CPI should be closer to 4% and the prospect of reaching 3% will become "more than just a figment of an economic forecaster's wild imagination"
- "As always, significant risks to this central outlook exist - but our sense is that these remain to the upside in terms of inflation persistence and hence interest rates"
- "A key upside risk is the size and amplitude of the migration cycle we are now firmly within. We have included a reasonable assessment of what might be expected but if a greater and more protracted migration cycle eventuates then we would expect the net demand impact on the economy and inflation to be greater and more persistent."
- But if inward migration triggers an early return to a strong housing market, then Westpac said the resulting boost to consumption, investment, and the labour market could really challenge the assumption that inflation expectations remain anchored to the 1-3 percent target range.
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The RBNZ cash rate is currently 5.25%.
Meetings ahead:
