Graeme Wheeler will be the first G10 central banker to hike rates onWednesday, lifting New Zealand’s OCR 25bps to 2.75%. Domestic indicatorsshow a gradually strengthening economy and inflation starting to lift from alow level, paving the way for policy normalization. A relatively aggressivehiking cycle is already priced (25bps in pretty much each of the next fourmeetings through July and 150bps by the end of next April), external risksremain to the downside, and a general election now is looming (Sep 20). Sothe governor should be leery of stoking expectations, particularly with thetrade-weighted exchange rate 50% above its long-term average and threestandard deviations from its upward trend midpoint
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