RBNZ terminal OCR forecast revised higher to 4.5% from 4% – TDS

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TD Securities economists announced that they have lifted the Reserve Bank of New Zealand’s terminal OCR forecast to 4.5% from 4% previously.

“Offshore developments have not influenced our terminal OCR upgrade.”

Activity has not taken a hit despite the rapid round of rate hikes, while financial conditions overall have probably eased. If the RBNZ is to get on top of inflation it needs wages growth to slow. A 4% terminal cash rate is unlikely to do the job.

The risks to our 4.50% terminal OCR are skewed to the upside. As such we don’t expect RBNZ rate cuts in 2023.”

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