New Zealand CPI Expected to Breach Target, Rate-Hike Bets Rise

New Zealand inflation is likely to breach the top of the Reserve Bank’s 1-3% target band for much of the year as the Iran war drives up fuel costs, three of the four major local lenders say, prompting traders to bring forward bets on interest-rate increases.

Inflation is expected to accelerate to 3.6% in the second quarter before slowing to 2.9% by the end of the year, Bank of New Zealand said in a report Monday. ASB Bank sees a peak of 3.3% in the second quarter and 3% by the end of the year, while Westpac anticipates it will hit 3.2% in the third quarter. ANZ Bank is still reviewing its projections.