Danske Bank: Expect the New Zealand Fed to raise rates by 75 basis points in February next year

Our bank expects the New Zealand Fed to raise rates by 75 basis points in February next year and another 50 basis points in April. The New Zealand Fed raised its official cash rate (OCR) terminal rate expectations sharply at its November meeting, suggesting a cumulative 125 basis point hike at three meetings in February, April and May next year. As inflation is now expected to accelerate further in the fourth quarter (to 7.5% from 7.2% in the third quarter), both prices and economic activity will face significant downward pressure, which is expected to at least partially prevent the official cash rate from moving upwards.