Economists at ANZ in New Zealand are pondering a sooner than expected Reserve Bank of New Zealand rate hike:
- We've upgraded our labour market forecasts
- we now expect a faster fall in unemployment to under 4% by 2023
- We're already seeing risks that OCR hikes might be needed even sooner than our February 2022 expectation, with CPI inflation forecast to hit 3% this year (with upside risk), and the labour market rapidly approaching full employment.
- The RBNZ continues to highlight their 'least regrets' strategy. They will want to see continued broad-based improvements across all their labour market indicators - crucially wage inflation and underutilisation. That's defensible, but there's a growing risk that the biggest regret could soon become waiting too long to hike.
Bolding mine.
