RBNZ kept OCR on hold at 5.50% at its last MPC meeting for the year but the tone, language, projections in MPS and Governor Orr’s press conference were rather hawkish.

At the press conference, Governor Orr said that a rate hike was discussed at the policy meeting, MPC is willing to raise rates if necessary; nervous that inflation has been outside 1-3% band for so long that the MPC is showing an upward rate bias not probability.

There were upward revisions to cash rate forecasts for 2024 and projections show no rate cut until mid-2025.

Hawkish surprise keeps rate hike bets alive for RBNZ, and this should be supportive of Kiwi upside.