Some economists are still believing the Reserve Bank (RBNZ) will do a double interest rate hike at some stage - and lift the Official Cash Rate (OCR) by half a percentage point as opposed to the customary quarter of a percentage point.
They concede, however, that there WON'T be a double move next week when the RBNZ has its next review of interest rates on Wednesday, October 6.
The expectation now is that the OCR will be lifted by the RBNZ from the 0.25% emergency setting it has been at since March 2020 up to 0.5%.
The markets had previously been freely speculating that the RBNZ might be tempted to kick off what's expected to be a series of rate rises with a double move up to 0.75%.
However, in comments circulated last week - and clearly aimed at dampening market speculation - RBNZ Assistant Governor Christian Hawkesby said: "...When there is a typical amount of uncertainty, and the risks are evenly balanced, then central banks globally tend to follow a smoothed path and keep their policy rate unchanged or move in 25 basis point increments.”
The message couldn't be any clearer.
BNZ head of market research Stephen Toplis therefore accepts that the RBNZ will raise the OCR by just 25 basis points to 0.5% next week.
But he says, in the BNZ's latest Markets Outlook publication, that a 50 point move "at some stage" cannot be ruled out.
"Indeed, if by November there is greater certainty about the outlook, and the economy is in the process of bouncing back from the adverse impacts of the current lockdown, then this could cement in the prospect that risks are heavily skewed in one direction resulting in an even greater material threat to the Bank achieving its [monetary policy] mandate," Toplis says.
"The prospects of a 50 point hike in November are strengthened by the fact that November is a full Monetary Policy Statement and offers the opportunity to explain, in depth, any decision that is made. And it’s a long wait until February [when the next review is] for the Bank to raise rates again in the event that the economy was picking up a strong head of steam at the time."
And Westpac economists don't think the RBNZ's comments last week necessarily rule out a 50 point OCR rise in future either.
In Westpac's Weekly Economic Commentary, senior agri economist Nathan Penny, says if the RBNZ decided that the risks around inflation were becoming skewed to the upside, it "could conclude that strong action is again needed".
"And indeed, the whopper June quarter GDP result demonstrated that the economy was already running much hotter than expected coming into the current lockdown," Penny says.