New Zealand’s central bank is more likely to wait until December before raising interest rates again, according to Assistant Governor Karen Silk. The Reserve Bank this week raised the Official Cash rate for a second straight meeting, with Governor Anna Breman saying further increases are likely but policymakers want time to assess impact. The tone of the statement led investors to downplay chances of a hike at the next meeting in October and aggressively price in an increase in the December meeting.

"We were quite clear that conditional on the outlook, we do think that there’s likely to be a need to increase rates further from here," Silk told Bloomberg in an interview Friday in Wellington. "Whether it’s October or whether it’s December is still open, but the way the track is situated it’s more likely the latter rather than the former."

Investors agree, putting the chance of a quarter percentage point hike to 3% in October at just 31%, swaps data show. By comparison there is a 100% likelihood of a move to 3% by December. Silk reiterated the RBNZ is not on a pre-determined track and must think flexibly as data evolves.

The RBNZ sees slightly faster inflation through 2027 and now expects the headline measure will not return to the 2% midpoint of its 1-3% band until early 2028. Silk highlighted upside risks including the Middle East conflict, firms raising prices during recovery, and persistent domestic inflation in areas like insurance and electricity.