Current turmoil in global financial markets has led BNZ economist Stephen Toplis and Westpac's Dominick Stephens to push back their forecasts for the Reserve Bank's next Official Cash Rate (OCR) hike to December from September.
Meanwhile, ANZ chief economist Cameron Bagrie said while ANZ was technically still picking a September hike, the OCR would be staying put unless the global environment improved substantially.
And Westpac chief economist Dominick Stephens has said he now expects a 25 basis point hike in the OCR in December, versus Toplis' pick for a 50 bps hike. Westpac were previously picking a 25 bps hike in September, followed by the same again in October.
Fears about a fresh global recession were fuelled by Standard & Poor's downgrade of the US government's credit rating from AAA to AA+ late last week, while sovereign debt problems in Europe continue to rattle investors.
Reserve Bank Governor Alan Bollard signalled on July 28 he would look to remove the March OCR 'insurance cut' from 3 per cent to 2.5 per cent in the near-term if conditions in the New Zealand economy continued to improve, and if global financial risks receded.
Markets read this as indicating a 50 basis point hike in the OCR on September 15, although that pricing has now fallen away again.
BNZ head of research Stephen Toplis said the bank's economists had been "beaten into submission" that the Reserve Bank would delay its removal of March's 'insurance cut' until December, unless the current turmoil was merely a 'storm in a teacup' and global markets rebounded.
If that were the case over coming weeks, BNZ would return to a September call, Toplis said.
BNZ ruled out moving its expectation back to October as December had a Monetary Policy Statement with a media conference, rather than just an OCR review; and because October was immediately before the General Election on November 26.