Reserve Bank expected to lift OCR to 3.0%, third rise in a row

The Reserve Bank is expected to raise the official cash rate by a quarter of a percentage point to 3.0% when it announces its decision on 28 October, RNZ reported. The official cash rate, or OCR, is the interest rate the Reserve Bank sets. It is the bank's main tool for keeping inflation between 1% and 3%, according to the bank.

If the increase goes ahead, it would be the third consecutive rise. A rate of 3.0% would be the highest level in a year, RNZ reported. The bank had earlier signalled a pause in rate rises.

The rate was lifted to 2.75% in September, when the bank's Monetary Policy Committee agreed to raise it by 0.25 percentage points, the bank said at the time.

Inflation is also running above the bank's target range. Annual inflation for the year ended September was 3.7%. RNZ reported signs that headline inflation would rise back to 4.5%. The bank aims for prices to rise at around 2% a year.

Westpac chief economist Kelly Eckhold has forecast a further increase in December and another in February, taking the OCR to 3.5%. He has also forecast rises in June and September, to 4%, according to RNZ. Westpac had forecast the October move to 3%, the New Zealand Herald reported.

The decision lands about 10 days before the general election on 7 November. Governor Anna Breman said the closeness of the decision to the election was not a factor.

The bank's policy statement is due at 2pm, with the Governor's webcast at 3pm.