The 50 basis point increase would equal an easing from 75 basis points in November as the RBNZ battles to contain soaring food prices.
The Reserve Bank of New Zealand is tipped to inflict more interest rate pain on Kiwi households on Wednesday by lifting benchmark cash rates 50 basis points to 4.75 per cent and signal more increases ahead.The RBNZ is tipped to take rates to 4.75pc across the Tasman on Wednesday.Westpac and Barclays both expect the RBNZ to take the peak cash rate to 5.25 per cent over the second quarter of 2023, with two further 25 basis point increases.
“The bank appears prepared to hike until there is a contraction in aggregate demand, in order to bring demand and supply into more balance in order to reduce inflation sustainably,” Barclays Bank’s economics team said.before easing fractionally to 7.2 per cent in the December quarter, with food inflation rocketing 11.3 per cent at its highest rate since 1990.Wednesday’s anticipated 50 basis point increase across the Tasman would follow a jumbo 75 basis increase in November.
Reuters said 80 per cent of its economists surveyed tipped a 50 basis point rise on Wednesday, in line with a call by the Commonwealth Bank economist Stephen Wu. “There are signs inflation pressures are close to peaking in NZ, but activity has generally held up by more than anticipated,” he said.New Zealand faces a similar mortgage cliff to Australia as many home loan borrowers come off cheap fixed rates offered during pandemic lockdowns in 2020 and 2021 to far higher borrowing rates in 2023.
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