Reserve Bank raises Official Cash Rate to 4.75% from 4.25%

The Reserve Bank (RBNZ) has raised the Official Cash Rate (OCR) by 50 basis points to 4.75% in its first interest rate review of 2023.  The Reserve Bank says while there are early signs of demand easing it continues to outpace supply, as reflected in strong domestic inflation; sees recent storm damage adding 0.3 percentage points to inflation in the March and June 2023 quarters.  

The RBNZ is therefore forecasting that annual inflation may actually blip up slightly - to 7.3% from 7.2% - in the March quarter before starting to fall. ANZ chief economist Sharon Zollner and senior strategist David Croy said the only "sensible" approach the RBNZ could take to the impacts of Cyclone Gabrielle was “wait and see”.