PHOTO: Photo: RNZ / Samuel Rillstone
The Reserve Bank is likely to raise the official cash rate aggressively to get to grips with rampant inflation, according to the ANZ Bank
n the wake of data showing annual inflation rate surged to a decade high 4.9 percent in the September quarter, the country’s biggest retail bank said the RBNZ could no longer be gradual and cautious in tightening policy.
ANZ Bank economists have revised their forecasts and are now picking six rapid fire 25 basis point rises (a quarter of a percentage point) at each of the monetary reviews to next August, taking the cash rate to 2 percent, where it was in mid-2016.
“The very strong inflation pulse has taken away the luxury of time and caution, as the OCR has more work to do,” ANZ economists said.
“We feel pretty confident in saying that we probably haven’t seen the worst of inflation yet … not only have we seen oil prices spike on concerns about a global energy shortage; it’s also become clear that supply chain pressures are going to get worse in the near term.”
ANZ now expected annual inflation to reach 5.8 percent by March next year before gradually easing back to 2 percent by mid-2023.
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