Five banks, two calls, one CPI print on 21 July that will settle it — here is what each bank is forecasting and why
New Zealand mortgage brokers are navigating the most contested official cash rate call in years — and for once, the major banks are not singing from the same sheet. Three banks — Westpac, ASB, and Kiwibank — expect the RBNZ to hold the OCR at 2.25% at the 8 July Monetary Policy Review. Two banks — ANZ and BNZ — are calling a 25-basis-point hike.
The divide is not about what oil prices have done — all five banks agree on that — but what it means for medium-term inflation. Brent crude has retreated to around US$72–73 per barrel, broadly in line with pre-conflict levels, after diplomatic progress between Iran and the US. Dubai crude had peaked just shy of US$170 per barrel in March before falling sharply.
Three banks read that as sufficient grounds to wait. Two do not. And as Kiwibank's Hamish Wilkinson, senior dealer, financial markets, cautioned, the Strait of Hormuz closed again over the weekend after briefly reopening — a reminder that "geopolitical risk hasn't been fully priced out."
Same data, opposite conclusions
The hold camp centres on near-term inflation relief. Westpac now expects annual inflation to peak at around 4% in the June quarter, down from a prior estimate of 4.5%, easing to 3.5% by year end — notably below the RBNZ's May projection.
ASB's Jane Turner, senior economist, made a similar revision, forecasting a CPI peak of 4.1% in Q2 before dropping to 3.4% by end-2026.
Kiwibank argues the oil shock has caused enough demand destruction to justify patience — "keeping interest rates at accommodative levels for the time being is the RBNZ's best bet at helping the economy recover," its economics team wrote.
BNZ's Stephen Toplis reaches the opposite conclusion in BNZ's Markets Outlook. BNZ's most distinctive argument is not about neutrality but about the nature of inflation itself. As oil prices fall and household real incomes recover, spending is likely to rebound — shifting inflation from supply-driven to demand-driven.
In that scenario, the RBNZ faces an even harder task. "Take the rate increases away and inflation forecasts would have been higher," BNZ noted. More broadly, BNZ is "strongly of the view the cash rate needs to get back to neutral relatively quickly to ensure stimulatory monetary policy does not add to inflation," and BNZ's view is that the RBNZ would "lose some credibility were it not to raise rates in July" given half the committee had wanted a hike at the previous meeting.
ANZ reaches the same destination — a July hike — but via a different route. ANZ frames its case around the exchange rate: the NZD TWI is already over 2% below where the RBNZ assumed in its May forecasts, a move ANZ calculates is mechanically worth around 25 basis points on the OCR track. Not hiking in July risks a further NZD selloff that adds to inflationary pressure. ANZ's conclusion: "a sensible strategy would be to get a hike in the bag and sound open-minded about what comes next."
What it means for borrowers and fixed-rate decisions
The question for brokers advising clients right now is the same regardless of who wins the July debate: with the OCR heading higher across every bank's forecast, how should borrowers position themselves?
Westpac offers the clearest guidance — two-to-five-year mortgage rates now lie above 5%, but fixing for one of these longer periods "still appears attractive as it would insulate borrowers from a trend higher in the OCR over the next couple of years."
On the OCR path itself, all five banks converge on a higher destination despite their July disagreement.
BNZ forecasts the OCR reaching 3.25% by end-2026 and rising toward a peak of 4% in 2027. ANZ expects 2.75% by September and 3.0% by December. Westpac forecasts hikes at September and December, peaking at 4% — 25 basis points lower than previously forecast. ASB forecasts three hikes across September, October, and November, bringing the OCR to 3.25% by early 2027. Kiwibank is the most cautious, advocating patience before the cycle resumes.
On housing, the picture is cautiously constructive for first-home buyers and property investors.
Westpac has revised its 2026 house price forecast to a small increase of around 0.6% annually — reversing an earlier call for a modest decline — as lower energy costs and reduced near-term rate expectations ease mortgage rates and support sentiment. BNZ's December year forecasts show house prices flat in 2026 before recovering to 4.5% growth by the end of 2027. Both readings point to a market that is stabilising rather than deteriorating — but one that remains sensitive to the rate path ahead.
What the split reveals is that the oil price retreat has not resolved New Zealand's inflation story — it has simply changed which chapter we are in. The June quarter CPI data, due 21 July, will be the pivotal data point that either validates the hike camp or confirms the hold camp was right — and will set the tone for the OCR cycle through the remainder of 2026.
Read the full reports from Westpac, ASB, Kiwibank, ANZ, and BNZ.
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