NZ Central bank to hike rates from August next year, says ANZ Bank

WELLINGTON, May 17 (Reuters) - ANZ Bank said on Monday that it expects New Zealand's central bank to begin raising the official cash rate (OCR) in August 2022, bringing forward its forecast as the economy recovers faster that expected.

The Reserve Bank of New Zealand (RBNZ) will increase rates gradually but steadily, reaching 1.25% by the end of 2023, ANZ said in its note.

However, consistent with its “least regrets” approach RBNZ will continue to signal that removal of policy stimulus remains a long way off, and perhaps suggest a rate hike in the second half of 2023 in its forecasts, ANZ said.

RBNZ will meet to decide on OCR rates on May 26.

"Markets are likely to seize on any change in language or forecasts in a less-dovish direction," ANZ Chief Economist Sharon Zollner said in the note.

"There is no question that the picture is evolving and that it is getting harder to argue that super-stimulatory monetary policy is the medicine that the economy needs for a prolonged period," she said.

RBNZ left all its current policy settings unchanged last month, saying monetary stimulus should continue to ensure its inflation and employment targets are met.

(Reporting by Praveen Menon; Editing by Stephen Coates)