OCR – November hike or May cut

However, the BNZ and Infometrics are forecasting an even higher OCR at 6% - a level only seen for five-and-a-half years in the past 25 years.

ANZ’s forecast is more aggressive on the house price outlook than the RBNZ and, as a result, it expects one more OCR hike.

The lift is based on its outlook for annual house price inflation to come in at about 5% over 2024, then moderate to about 3% in 2025. If upside housing pressures result in upside CPI inflation pressures, the RBNZ is likely to respond with hikes, stopping the housing upswing in its tracks, Sharon Zollner, ANZ’s chief economist says. 

“While this economic cycle has been rapid, if the economy fails to slow sufficiently to cool core inflation, the RBNZ may be forced to respond with a higher OCR than anyone is forecasting. And this would be expected to put the brakes on the housing market pronto.”