The Reserve Bank of New Zealand (RBNZ) may hike rates by 25 basis points to head off inflationary pressures when it meets this Thursday, making it the first major central bank in the developed world to start normalizing monetary policy.
Official data on Jan. 21 showed the consumer price index rose 0.1 percent in the three months to Dec 31, confounding expectations for a 0.1 percent fall, and pushing the annual rate up to 1.6 percent – the highest since March 2012, Reuters reported. The central bank had forecast a fall of 0.2 percent.
However, those calling for a rate hike are in a minority and the consensus view points to an increase only in March. Expectations are evenly balanced with interest rate swaps implying a 48 percent probability of a rate hike.
A Reuters poll of 17 forecasters found only three banks – ANZ, HSBC and Citibank – ready to predict an increase this week.
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