ASB expects the Reserve Bank of New Zealand to keep the OCR unchanged, diverging from other major banks predicting a 25bp hike.
ASB predicts the Reserve Bank of New Zealand will hold the Official Cash Rate at 2.25% at its July 8 review, contrary to market expectations of a 25 basis point hike. The bank argues that a recent retreat in oil prices provides the RBNZ with time to assess economic shocks without immediate action.
Most major banks had anticipated a 25bp increase, reflecting a split in market sentiment ahead of the decision. ASB maintains that while a hold is likely this week, further tightening remains probable later in the year, regardless of Wednesday’s outcome.
The divergence in expectations suggests potential volatility in NZD and rate markets following the announcement, though ASB believes the medium-term policy trajectory will remain largely unchanged.