Kiwibank tries to shoot down ANZ’s take on what the Reserve will do
Tuesday, 14 April 2026
Kiwibank chief economist Jarrod Kerr has labelled calls for the Reserve Bank to soon raise interest rates “reckless” and unwarranted.
Kerr confirmed Kiwibank had issued the warning in response to a prediction by ANZ chief economist Sharon Zollner that the Reserve Bank would raise the Official Cash Rate three times, in July, August and September.
ANZ’s forecast overturned its previous prediction that the Reserve Bank wouldn’t raise the OCR from its current level of 2.25% until December.
Kiwibank and ANZ appeared at odds over how to interpret the outcome of the monetary policy review conducted by the Reserve Bank last week.
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Zollner said ANZ’s thinking had been influenced by the emphasis that the Reserve Bank put on its willingness to act decisively to keep inflation at the 2% mid-point of its target band in the medium term, saying it chose to finish “on a very stern tone”.
But Kerr said Kiwibank saw the central bank statements as neutral and merely a reminder of its mandate.
Reserve Bank governor Anna Breman, who also warned of the risk of “unnecessarily stifling the economic recovery”, had been deliberately and appropriately “very balanced” in her comments at the time of the review, he said.
It didn’t matter whether ANZ was calling for three early rate hikes or simply predicting that, Kerr said.
“We just don’t think that's the appropriate path forward. I just don’t see a situation where the Reserve Bank can take such action so quickly.
“We can’t say the war on Iran is even finished yet, so to be going through the upside scenario is way too early.”
Kiwibank said in its research note that the real threat remained “of a true knock-out punch” from a domestic fuel shortage.
“The heightened uncertainty is causing businesses and households to bunker down. Raising interest rates is tone deaf, and potentially reckless. Both businesses and households are struggling with increased costs, not surging demand,” it said.
The best course of action for the Reserve Bank was “watch, wait, and weigh up the facts once they have the information in front of them”, it said.
BNZ research head Stephen Toplis said it had viewed the monetary policy review as “an absolute repetition” of a speech Breman had given to BusinessNZ in Auckland just two weeks earlier.
“It would have been a bit weird if it wasn’t.”
In the speech, Breman said the Reserve Bank should avoid reacting too early to near-term inflation pressures that “monetary policy can do little about” but also said it should avoid reacting too late if above-target inflation became embedded in the economy.
BNZ is currently forecasting 50 basis points of rate rises this year, starting in September.
“We don’t see a reason to change our view, which is not the same as saying we’ve got huge conviction in it,” he said.
“But why change it until we’ve got a strong conviction in something else? We don’t want to get into this game of changing our rate call every five minutes. In this environment, we’re all running blind.”
It was mostly traders and journalists who were interested in what the Reserve Bank did on a given day, Toplis said.
“What matters is the bigger messages. And the bigger message here is inflationary pressures are rising, they are likely to become embedded at some point in time. Interest rates need to rise to compensate for that and both households and businesses should take a cautious approach to [borrowing] given those risks.”
“As [Zollner] also says, we don’t really know what’s going on. If we’re all thinking that, so is the central bank. So to pretend that we can second-guess their guesses is silly in this environment and unhelpful.”
Toplis said his advice on the Middle East crisis was not to be complacent.
“The best advice you can give people is don’t just push it aside, because even if it’s all over and done with in a couple of days, the costs of this will still impact people for some time to come.”