ANZ tips three rate rises as Treasury warns inflation could go higher than expected
New Zealand’s major bank economists have sharply revised their interest rate forecasts, with ANZ now predicting the Reserve Bank will raise the Official Cash Rate three times before the end of the year, as Treasury officials acknowledge their earlier inflation projections may have underestimated the lasting impact of the Middle East oil shock.
ANZ’s economics team said this week it now expects the Reserve Bank of New Zealand to lift the OCR in July, September, and October — pushing the rate from its current 2.25% up to 3.0% by late 2026. That is a significant shift from ANZ’s previous position, which had not pencilled in any rate rises until December. ASB has also updated its own thinking, forecasting hikes beginning in September and the OCR reaching 3.25% by mid-2027.
The driving force behind the revisions is an oil-driven inflation surge that is already stretching beyond the Reserve Bank’s 1 to 3 percent target band. December quarter inflation came in at 3.1%. The Reserve Bank, which held the OCR at 2.25% on April 8, forecast inflation reaching 4.2% in the June quarter — a figure that several economists now view as potentially conservative.
Treasury officials have been modelling a range of oil shock scenarios since the Strait of Hormuz crisis began disrupting global supply chains. Finance Minister Nicola Willis had previously outlined a worst-case inflation peak of 3.7%, but Treasury Deputy Secretary Chris Bunny confirmed last week that revised modelling now pointed higher. Westpac economist Kelly Eckhold said the 3.7% figure was “likely closer to baseline” than a worst case, with some scenarios pointing to figures as high as 7.5%.
At the pump, the impact is already being felt in full. Diesel is now sitting at $3.89 per litre — more expensive than petrol — while 91 octane has reached $3.48 per litre. Fuel prices have risen by roughly 35% for petrol and 87% for diesel since Hormuz tensions began.
For homeowners, the prospect of three OCR hikes in the space of a few months is a sobering development. Many borrowers who locked in fixed-rate mortgages during the post-pandemic rate-cutting cycle will be coming off those terms in 2026, and the forecasts suggest the environment they are refixing into will be meaningfully more expensive. A move from 2.25% to 3.0% would add hundreds of dollars per month to repayments on an average-sized mortgage.
ANZ acknowledged there was significant uncertainty in its view, noting it was not a high-conviction forecast and urging people to take all bank forecasts with a degree of caution. But the bank’s economists also made clear they saw the risks as skewed toward acting too late rather than too soon, writing that “the risks of going too late outweigh the risks of hiking too soon, as long as the OCR is not considered contractionary.”
The March quarter Consumer Price Index will be released on April 21 and is widely expected to be the next major data point shaping the Reserve Bank’s thinking. If inflation has continued climbing in the three months to March, pressure on the Reserve Bank to act sooner rather than later will intensify.
NZ fuel stocks remained in reasonable shape as of April 12, with 49.1 days of diesel supply, 59.7 days of petrol, and 50.7 days of jet fuel recorded by government officials — all slightly lower than the previous week. Prime Minister Christopher Luxon said fuel importers had given the government confidence that shipments were secured through to the end of May, and some into June, with 14 tankers either en route or already in New Zealand waters.
Businesses are navigating the uncertainty alongside households. Freight costs, energy costs, and input prices have all increased with diesel at record domestic levels, adding to margin pressure for transport operators, manufacturers, and the hospitality sector. The minimum wage rose to $23.95 per hour in April 2026, a 2 percent increase — well below the rate of cost-of-living increases now facing workers and employers alike.
The full picture will not be clear until the CPI data lands on April 21, and economists across the board are cautioning that their forecasts remain subject to rapid revision as the Middle East situation evolves. For now, the direction of travel appears increasingly settled — rates are heading up, and the only questions are how fast and how far.
If you have thoughts on rising interest rates and what they mean for your mortgage, business, or household budget, we would love to hear from you in the comments below.