WELLINGTON, May 22 Reuters New Zealands central bank is expected to deliver a 25basis point hike on Wednesday, but the focus will be on whether the policy rate will peak at a higher level than previously thought in the wake of a more stimulatory budget last week.

After surprising financial markets with a 50basispoint bps hike to 5.25 in April, the Reserve Bank of New Zealand is now under pressure to moderate its tightening pace as the economy teeters on the verge of a recession.

Yet, while back in February the RBNZ forecast the cash rate would peak at 5.5, a growing minority of economists expect a further tightening is possible in July.

That view has gained currency after last week39;s government budget showed increased spending, while signs the house market is turning, surging migration and slipping mortgage rates have also raised the risk of another rate hike beyond Wednesday39;s policy review.

The relatively happy place to sit and watch, worry and wait keeps inching just out of reach, said ANZ economists in a note. ANZ now expects a 25basis point hike this week and another increase in July.

Four economists in a Reuters poll of 21 economists now expect the cash rate to reach 5.75 or higher. Fourteen expect rates to hold at 5.50 next quarter.

A frontrunner in withdrawing pandemicera stimulus among its peers, the RBNZ has remained singularly focused on curbing inflation, lifting rates by 500 basis points since October 2021 the most aggressive tightening streak…