On May 22, the Federal Reserve Bank of New Zealand will announce its interest rate decision on Wednesday. Interest rate futures suggest that there is a 40% possibility of raising interest rates by 50 basis points, bringing the benchmark interest rate to 5.75%, which is higher than the Federal Reserve Bank of New Zealand’s own forecast.
Prashant Newnaha, senior rates strategist for Asia Pacific at TD Securities, expects terminal rates to hit 6%, up from 5.5% previously, citing inflation in New Zealand driven up by fiscal stimulus and rising net immigration.