Outlook for Borrowers: Post September MPS
• The RBNZ lifted the OCR by 25bp to 2.75%, as widely expected, and retained a data-dependent tightening bias.
• The modelled OCR track was little changed and implies another 25bp increase is likely before year-end.
• BNZ now expects the RBNZ to leave rates on hold at the October Review before resuming tightening in December.
• Market pricing implies an OCR near 3.0% by year-end, rising to around 3.6% by December 2027.
• Short-dated NZ rates are close to cycle highs, suggesting much of the expected tightening path is already priced. Look for dips to top up hedging.
• Long-end global yields have reached multi-decade highs reflecting higher expected policy rates and rising term premia.
• NZ 5-year rates have pushed above 4.0% and towards the top of their expected trading range, limiting the appeal of adding fixed-rate cover at current levels.