Economists are suggesting the RBNZ should provide some guidance on its thinking on interest rates perhaps even ahead of the next Official Cash Rate review, which is not till late February

The Reserve Bank (RBNZ) is coming under some pressure to give early guidance* next year of its view on interest rates - perhaps before even the next scheduled Official Cash Rate Review (OCR) set down for February 18.

The long gap between the last OCR review of one year and the first review of the next year is again in focus following the sharp rise in wholesale interest rates and some rises in mortgage and deposit rates after the last OCR review on November 26. And the rises have come even though the RBNZ cut the OCR again in that review by 25 basis points, following on from a cut of 50 bps in the October review. However, the comments from the RBNZ accompanying the November decision suggested it saw itself as done with rate cuts, while the markets had expected it would at least leave the door open to more cuts.

Kiwibank economists have not minced their words and charged the RBNZ with "miscommunication".

Westpac economists have already on several occasions suggested the RBNZ might like to clarify its position ahead of the February 18 OCR.

And in its latest Weekly Commentary, Westpac senior economist Michael Gordon, in discussing the September quarter GDP figures due for release on Thursday of this week, said that if the figure is a 0.9% increase as the Westpac economists forecast, this would be "substantially stronger than the 0.4% that the Reserve Bank expected in its November Monetary Policy Statement, suggesting that the economy is working through its excess capacity faster than thought".

"While the RBNZ themselves may take this in their stride, it comes at a time when interest rate markets are already falling over themselves to price in a turnaround to OCR hikes next year," Gordon said.

"At the least, this again points to the undesirability of having a nearly three-month gap between policy reviews over the summer period; we think it would pay for the RBNZ to provide some guidance on its thinking once people start returning to the office in January," he said.

Kiwibank's chief economist Jarrod Kerr, senior economist Mary Jo Vergara and economist Sabrina Delgado, in their Outlook for 2026, say the RBNZ can "and should" lower wholesale rates "with the stroke of a pen in February, or from a speech at any time".

"The RBNZ’s misstep is all-too familiar," the Kiwibank economists say.  After the November OCR review, they say they "found ourselves scratching our heads, in disbelief of the RBNZ’s prematurely 'hawkish' stance".

"...There’s been some ridiculously hot, cold, hot and then cold biases from the RBNZ post-Covid. Over the last few years the November decisions have been 'hawkish', only to be followed by a “dovish” (we stuffed up) February, then a “hawkish” (we’ve misread it again) May, and a “dovish” (sorry about that, again) August. Stranger things…

"...The RBNZ’s miscommunication in November, along with climbing wholesale rates, and higher retail lending rates, suggest we may indeed get another dovish commentary in February. It’s silly… we know. At the end of the day, retail rates are in a lower bound, although not as low as they should be."

And ASB's chief economist Nick Tuffley makes special reference to the spike in interest rates in ASB's Economic Weekly, saying that there is a lot of attention on mortgage rates, particularly on why fixed rates aren’t falling and have even started going up in some cases after the RBNZ has just cut the OCR.

"That is because where the OCR is sitting right now is not the key driver of term rates. The OCR influences term rates through where people expect the OCR to track over the term of the fixed rate," he said.

"Rightly or wrongly, the RBNZ gave a pretty clear signal last month that the OCR isn’t that likely to fall any further, in contrast to market pricing ahead of the announcement that there was a 50:50 chance that the OCR would get cut again in the future," Tuffley said.

"That past pricing had contributed to fixed term borrowing costs falling as low as they have been recently. But market pricing has moved on: term wholesale rates are no longer factoring in much chance of a further OCR cut and are now pricing in the likelihood that the OCR will be over 50bp higher by the end of 2026.The RBNZ’s stance, strong NZ data, and higher offshore interest rates have all contributed to that. As of this [Monday] morning, the key 2-year swap rate is roughly 50bp higher than it was right before the OCR announcement," he said.

"Term interest rates move in advance of the OCR – they started falling in 2023, nearly a year before the OCR was first cut. They have moved off their lows now that financial markets have readjusted to see a distant OCR increase as more likely than another cut in the more immediate future."

*A short time after this article was published, Reserve Bank Governor Anna Breman issued a statement on the OCR review of November 26 and subsequent market reaction.