A Reuters poll shows 28 of 29 economists expect the RBNZ to hold rates at 2.25% on May 27, but a slim majority now see at least one hike by end-September as Iran war inflation risks build.

Summary:
Source: Reuters poll of 29 economists, conducted May 18-22

• 28 of 29 economists expect the RBNZ to hold its official cash rate at 2.25% at the May 27 meeting
• Just over half of respondents, 14 of 27, now expect the OCR to reach 2.50% or higher by end-Q3, a sharp shift from April when only 8 of 30 foresaw a hike by that point
• The end-year median OCR forecast has risen to 2.75%, up from 2.50% in the April poll
• New Zealand inflation rose 3.1% last quarter, again breaching the top of the RBNZ’s 1-3% target band; oil above $100 a barrel for most of the past two and a half months is seen as a key upside risk to expectations
• ASB Bank chief economist Nick Tuffley expects the RBNZ to begin lifting rates from July, citing highly skewed upside risks to the inflation outlook and the danger of price pressures spreading from fuel into services and wages
• Major bank forecasts diverge sharply: Kiwibank sees one hike by end-March 2027, while Westpac forecasts 125 basis points; ASB and BNZ project 100 basis points; ANZ sees 75 basis points
• From the May meeting, the RBNZ will publish individual committee member votes when consensus is not reached, a new transparency measure aimed at improving public understanding of its decisions

The Reserve Bank of New Zealand is all but certain to leave its official cash rate unchanged at 2.25 percent when it meets on Wednesday, but a significant shift has taken place in the outlook beyond that decision, with a slim majority of economists now expecting the central bank to resume tightening before the end of September.

A Reuters poll of 29 economists conducted between May 18 and 22 found that 28 expected the RBNZ to hold on May 27. The near-unanimous view on the immediate decision masks a more divided picture on what comes next. Just over half of respondents, 14 of 27, forecast the official cash rate rising to 2.50 percent or above by the end of the third quarter, a striking reversal from the April poll in which only eight of thirty economists held that view.

The end-year median forecast for the OCR has moved to 2.75 percent, up from 2.50 percent in April, with poll medians pointing to a further rise to 3.00 percent by the end of the first quarter of 2027. Around three quarters of all respondents expect at least one rate increase this year, though there is little agreement on the precise timing.

The catalyst for the shift is not hard to identify. The Iran war has kept oil prices above $100 a barrel for most of the past two and a half months, feeding into broader inflationary pressure across the New Zealand economy. Consumer prices rose 3.1 percent in the most recent quarter, again pushing through the top of the RBNZ’s one to three percent target band. The risk, as ASB Bank chief economist Nick Tuffley articulated it, is not just the current level of fuel costs but the possibility that inflation expectations become entrenched and that price pressures spread from the pump into services and wages, a dynamic that would be considerably harder to contain.

The comparison with Australia is instructive. The Reserve Bank of Australia, the RBNZ’s closest regional peer, has already delivered three rate increases this year after inflation proved more persistent than its models anticipated. The fear that New Zealand may be on a similar trajectory is clearly informing the shift in economist expectations.

Major bank forecasts reflect genuine disagreement about how far and how fast the RBNZ will ultimately need to move. Kiwibank sits at the cautious end, projecting a single hike by end-March 2027, while Westpac is at the other extreme with 125 basis points of tightening over the same horizon. ASB and BNZ both forecast 100 basis points, and ANZ sits at 75.

Wednesday’s meeting also introduces a new dimension to how the RBNZ communicates its decisions. For the first time, the central bank will publish individual votes cast by monetary policy committee members in cases where consensus is not reached, a transparency reform designed to give markets and the public clearer insight into the internal dynamics of its deliberations.