ANZ New Zealand economists are maintaining their forecast that the Reserve Bank will raise the official cash rate three times in the second half of this year, despite a recent sharp fall in oil prices.
The economists predict the Reserve Bank will lift the OCR by 25 basis points in July, September and October 2026, taking the rate from its current level of 2.25% to 3%.
The Reserve Bank had signalled three rate rises before oil markets shifted. Crude prices fell sharply after a Memorandum of Understanding was reached between the United States and Iran.
ANZ economists said the speed and extent of the oil price correction surprised both them and the Reserve Bank. But they are keeping their rate forecast unchanged.
The 3% target represents the Reserve Bank's current estimate of a neutral OCR.
ANZ forecasts house prices will drop 2% in 2026. The bank attributes the forecast decline to higher mortgage rates, taxation uncertainty ahead of the General Election, and weaker economic growth from oil price shocks.
Prices have remained flat through the first five months of this year, following the boom and bust cycle of the Covid era.
The economists noted that upside risks to their house price forecast are increasing if oil prices remain low. But they concluded that headwinds will likely keep the housing market and prices subdued in 2026.