Fitch: RBNZ to hike OCR next week

In its latest report, Fitch Ratings noted that they expect the Reserve Bank of New Zealand (RBNZ) to raise the Official Cash Rate (OCR) at its monetary policy meeting next week, adding that the “hikes would aid banks' profitability.”

Key quotes

"If the RBNZ opts to raise interest rates in response to tightening labor markets and emerging price pressures, the net effect will probably be credit positive for New Zealand banks".

"Expect the RBNZ to begin raising interest rates at its meeting on 18 August," which could aid banks' profitability due to "increased returns on bank assets, particularly loans," although "the positive earnings impact from any rate hikes may take some time to flow through.”

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