Forecasts for RBNZ rate hikes are being ramped higher after surging inflation report

The inflation data is here:

NZ Q3 CPI 2.2% q/q (expected 1.6%)

NZD/USD response:

NZD/USD up a few ticks after the surging inflation report

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Analysts in New Zealand are now marking their Reserve Bank of New Zealand rate hike calls up.

ANZ:

• expect the RBNZ to raise the OCR 75bp in both November and February
• peak of 5% (previously at 4.75%)
• “domestic and core inflation pressures unexpectedly accelerated in Q3”

ASB:

• expect a +75 basis-point hike at the 23 November meeting
• forecast peak for the OCR raised to 5.25%, from 4.25%
• “A self-sustaining high inflation dynamic looks like it is becoming increasingly embedded,”
• “Restrictive OCR settings and a clear RBNZ focus on delivering eventual sub-3% inflation outcomes are needed.”

Kiwibank raised their forecast OCR peak to 4.5% from 4%:

• “Today’s report will be like a red rag to an inflation-fighting bull”
• “Stronger for longer inflation will force interest rates higher for longer than we had previously expected”

NZD/USD update:

This article was written by Eamonn Sheridan at forexlive.com.