Reuters poll shows economists expect RBNZ to hike rates on September 2
Key Takeaways
- •In a Reuters poll conducted between August 20 and 27, 27 of 31 economists expected the RBNZ to lift the official cash rate by 25 basis points to 2.75% on September 2, marking a second consecutive increase.
- •New Zealand inflation rose to a 2.5-year high of 4.1% in the latest quarter, more than a full percentage point above the top of the 1%-3% target band, and economists do not expect it to return to target this year.
- •Two-thirds of the economists surveyed anticipate at least one more quarter-point hike next quarter, with the median year-end forecast of 3.00% only just reaching the bottom of the estimated 3.00%-3.25% neutral rate band.
- •Forecasts for the end-2027 cash rate ranged from 2.50% to 4.00% with a median of 3.00%, with Westpac and BNZ projecting 4.00%, Kiwibank and ASB seeing 3.25%, and ANZ expecting 3.00%.
- •A separate Reuters poll showed home prices broadly flat this year before rising 3% in 2027, while the economy is forecast to grow 0.4% this quarter after likely contracting 0.1% in the previous one.
With 27 of 31 economists expecting a September hike, the move itself carries little surprise value, keeping attention on the pace and scale of further tightening. Even at 2.75%, the cash rate would remain below the neutral level generally estimated at 3.00% to 3.25%, framing the September decision as a waypoint in the cycle rather than its endpoint. The wide dispersion in end-2027 forecasts, ranging from 2.50% to 4.00%, points to genuine uncertainty over how far this cycle will ultimately run, with Westpac and BNZ at the hawkish end anticipating 4.00% versus ANZ's more moderate 3.00% call. A softer-than-expected housing market, with prices seen broadly flat this year, may offer some counterweight to inflation concerns, but signs of economic recovery, including expected growth resuming this quarter, give the RBNZ room to continue tightening without an immediate growth constraint.
Earlier:
Preview: Inflation and growth strength point to further RBNZ tightening, BNZ says
Economists overwhelmingly expect the Reserve Bank of New Zealand to keep raising rates through year end, but views differ sharply on where the tightening cycle will eventually stop.
In a Reuters poll conducted between August 20 and 27, 27 of 31 economists said they expect the RBNZ to raise the official cash rate by 25 basis points to 2.75% on September 2. That would mark a second consecutive increase.
The central bank last raised rates in its previous meeting, its first increase in more than three years, and signaled further tightening ahead as it seeks to return inflation to its 1%-3% target range. Since then, official data has shown inflation rising to a 2.5-year high of 4.1% in the latest quarter, more than a full percentage point above the top of the target band. Economists do not expect inflation to return to target this year, citing in part energy-price pressure.
One analyst in the poll said the case for further tightening is straightforward: inflation remains above target, and the RBNZ is uncomfortable being as far below neutral as it currently is.
New Zealand's neutral interest rate, the level that neither stimulates nor restrains growth, is generally estimated at around 3.00% to 3.25%. Measured against that benchmark, the September level of 2.75% would still be providing stimulus, and even the median year-end forecast of 3.00% would only just reach the bottom of the neutral band rather than push policy into restrictive territory.
Two-thirds of the economists surveyed, 20 of 30, expect the RBNZ to raise rates again by at least 25 basis points next quarter. The median year-end forecast is 3.00%, which from a September rate of 2.75% is consistent with one further quarter-point move by year end.
Higher rates are expected to weigh on the housing market. A separate Reuters poll of property analysts showed home prices broadly flat this year, lagging inflation, before rising 3% in 2027 — meaning that, with inflation running at 4.1%, housing would continue to lose value in real terms this year.
The broader economy is also showing tentative signs of recovery. It likely contracted 0.1% in the previous quarter, but growth of 0.4% is forecast for the current quarter, according to a separate Reuters poll. That could give the central bank additional room to keep tightening without immediately constraining activity.
Among economists who provided forecasts through the end of 2027, there was no clear consensus. Projections ranged from 2.50% to 4.00%, with a median forecast of 3.00% — a span that straddles the neutral band itself, meaning economists disagree on whether the cash rate will end the period below, at, or well above neutral.
Some major New Zealand banks were notably more hawkish than the broader panel. Westpac and BNZ both projected the cash rate would reach 4.00% by the end of 2027, while Kiwibank and ASB saw 3.25% and ANZ expected 3.00%.
One analyst said the eventual peak, which they personally put at around 3.25%, would likely depend on whether spare capacity in the economy or ongoing cost increases dominate the medium-term inflation outlook.
