FXStreet reports that Ben Udy, Australia & New Zealand Economist at Capital Economics, expect the RBNZ to tighten monetary policy in the years ahead.

“We expect asset purchases to be wound down from this year before the Bank hikes rates in 2022. There are several reasons why we no longer expect further monetary stimulus. First, the recovery in output occurred much faster than we had anticipated as GDP returned to pre-virus levels in Q3. Second, most measures of underlying inflation surged in Q4. All of them are now close the RBNZ’s target mid-point. Third, the housing market in New Zealand is running red hot. By the end of 2022 we expect inflation will have been around or above target for nearly two years and that employment should be above its maximum sustainable level. On that basis we expect the Bank to begin hiking rates at the end of 2022.”