RBNZ set to hike by 50bp, RBA remains the archdove

The exceptional strength of New Zealand’s mean that we now think the RBNZ will hike rates by 50bps in November and by a further 100bps next year, which would take the OCR to 2.0%. That’s above the analyst consensus but less hawkish than market pricing as we still think falling house prices and higher debt servicing costs will weigh on consumption and dwellings investment next year. In Australia, the RBA’s persistently dovish stance has taken some of the wind out of financial markets’ sails. But we still believe that wage growth will pick up sooner than the Bank anticipates. That’s why we are sticking to our view that the RBA will first hike rates in early 2023, a year sooner than the Bank expects.