‘Line-ball call’: NZIER’s ‘shadow board’ split over whether Reserve Bank should hold or hike OCR this Wednesday

The New Zealand Economic Research (NZIER) is expecting another “line-ball” Official Cash Rate (OCR) call from the Reserve Bank (RBNZ) on Wednesday.

But the NZIER’s ‘shadow board’ is split on which way they think the RBNZ should vote at the upcoming monetary policy meeting.

The NZIER brings together a panel or ‘shadow board’ of experts, which includes academics, economists and business people who state their views on what the RBNZ should do ahead of every OCR decision.

NZIER senior economist Ting Huang says the shadow board's divided over the July meeting, with a narrow majority of members having recommended the RBNZ keep the OCR unchanged at 2.25% this Wednesday.

“However, it has become a line-ball call in terms of whether the RBNZ should keep the OCR on hold or raise it by 25 basis points in the July [8] meeting,” she says.

“Rising inflation was a key reason given by members who want the OCR moved back towards neutral sooner rather than later. There was a range of views on the effect of the oil price shock on inflation and the New Zealand economy over the next year.”

In the build-up to Wednesday's OCR decision, there has been much debate on whether the Reserve Bank will hold the cash rate for the fourth meeting in a row or start a new hiking cycle.

The RBNZ started cutting the cash rate from the cycle peak of 5.5% in August 2024 and the OCR has been marinating at 2.25% since November 2025.

At the Reserve Bank’s May Monetary Policy Statement (MPS), the internal and external members on the Monetary Policy Committee (MPC) were split on whether or not to raise the cash rate, but ultimately left it at 2.25%, with a warning that OCR hikes are on the horizon. 

Jumping at shadows

The bank economists on the NZIER’s shadow board are also split over whether they think the RBNZ should hike or hold the OCR on Wednesday. 

BNZ’s Stephen Toplis wants the cash rate increased while Westpac NZ’s Kelly Eckhold says the urgency for a hike has been reduced and raising the OCR in September would be a better idea. Kiwibank’s Jarrod Kerr is also against the OCR being raised.

“Interest rates should be held to allow the economy to recover. There’s no need to jump at shadows,” Kerr says.

Across the rest of the shadow board, BusinessNZ chief economist John Pask says inflationary pressures are likely to remain elevated for some time, which makes it appropriate the RBNZ starts the process of “moving interest rates back up towards more neutral levels.”

Sharesies’ Brooke Roberts has pushed for a 25-basis-point increase. She says larger interest rate increases aren’t needed while the economy is still subdued and unemployment is relatively high. Viv Hall, an economics professor at Victoria University of Wellington, also agrees that the OCR should be raised to 2.5%.

Dennis Wesselbaum, a senior economics lecturer at the University of Otago, says that keeping the cash rate on hold for one more meeting “seems reasonable” while Gross Domestic Product (GDP) growth remains subdued. 

Boffa Miskell chief executive Kerry Gupwell agrees and says the case for cash rate tightening has “strengthened,” but he’d prefer to see one more round of data before the OCR goes up.

There are nine shadow board members with four favouring an increase, and five wanting the OCR left unchanged, including former RBNZ Chairman Arthur Grimes who provided no specific comment in the release from NZIER.

The shadow board's views on where the OCR should be in a year are centred around 3% to 3.25%, according to Huang.

“Soft demand and the elevated unemployment rate were provided as reasons to be considered in the pace of tightening over the coming year,” she says.

The Reserve Bank will be releasing its July OCR decision on Wednesday at 2pm.