Interview: RBNZ’s Hansen Wants Lop-Sided MonPol To Move Towards Centre

• Published on
• 29 May 2026, 04:11 PM

(This interview was first published at 3:42 PM)

--Says High Probability of OCR Hike in July
--Lop-Sided Risks Based on 2/3 Scenarios Pointing to OCR Hikes, plus Baseline
--Hansen view was two hikes May and September, pause until February
--Gai’s speech one of several factors influencing his thinking
--May rate hike call also aimed at providing stronger signal for wage prices
--Sees upside risks lingering beyond any conflict resolution

By Sophia Rodrigues

(Sydney, May 29, 2026) – The starting position for the Reserve Bank of New Zealand’s monetary policy was a lop-sided one with accommodative policy currently and upside risks to the Official Cash Rate that justified the need to act at this week’s meeting.

This was the view of Monetary Policy Committee (MPC) member Carl Hansen who was one of the three external members calling for a rate hike at the meeting.

Hansen made the comments in an interview with Central Bank Intel Friday.

“Our starting position is sort of a lop-sided position. We are already accommodative and I thought we better get into a more central position rather than lopsided,” Hansen said.

The lop-sided view is based on three scenarios, apart from the baseline, in the Monetary Policy Statement. Two of three scenarios point to increases in the OCR.

“Given recent period of elevated inflation after Covid, and balance of risks to the upside, I thought it was better to err on the upside for the OCR,” he said.

Hansen thought a rate hike in May would provide an optionality for the next meeting in July to hike again if upside risks eventuated.

Importantly, Hansen believed tighter monetary policy now would provide “a stronger signal to wage prices that the OCR is on an upward trajectory.”

Two rate hikes in May and September was Hansen’s preferred path for the OCR, and then a hold until February next year. These two meetings have more data flows to inform the decision including inflation, inflation expectations and wage expectations, none of which are available in July, he pointed out.

At the same time, he noted there will be data on business and consumer confidence, selected price indexes before the July meeting.

As it turned out, the MPC finally agreed to an OCR path that points to three hikes this year (July, September and December). So, all things equal, compared with Hansen’s own central projection, there will an extra hike because of no change at this meeting.

Hansen, however, doesn’t see it this way, stressing he wouldn’t put a “lot a weight” to his view beyond September.

“There’s isn’t a high bar for me to change my view further out because there’s a lot of uncertainty,” he said.

Hansen noted the RBNZ’s central projection points to a “high probability of an OCR rise in July.”

NOT COMPROMISE

Asked if the projection was a compromise between the divided committee at this meeting, Hansen said it was based on the “forward view that everyone was comfortable with.”

Hansen’s core view is the Middle East conflict poses an upside risk to inflation even in a scenario where the conflict is resolved.

“There’s more unknowns that could come to bite us,” he said. These risks include the quality of any resolution, ongoing frictions, soft conflicts, tolling restrictions, restoration of LNG plants.

There are also other risks to consider including infrastructure rebuild, route diversion costs etc.

He, therefore, supports erring on the side of returning inflation to the 2% midpoint target. “Getting the OCR into a central position over time is a prudent thing to do,” he said.

Asked if he was influenced by fellow MPC member Prasanna Gai’s recent speech based on his research on hub shocks, Hansen said it brought a lot of clarity and was one of the several factors he took into account.

On the neutral rate, Hansen said any nudge higher in the long-run neutral rate wouldn’t have affected his recommendation and view because he puts a lot of weight on the next six month.

“Clearly the short run neutral rate is higher than the long one,” he stated.

--Contact: Sophia@centralbankintel.com