Deposit rates have also been boosted by 20 basis points.
Westpac also lifted its nine-month deposit rate to the highest amongst its competitors (6 per cent).
“As many households grapple with cost of living pressures, now is a good time to ensure your money is working for you,” Westpac NZ general manager of product, sustainability and marketing Sarah Hearn said.
Westpac said there were no changes to its home loan rates.
Market pricing for whole rates lifted last week on the GDP news. But banks also face rising pressure on international borrowing costs, which still represent a significant proportion of their funding.
Last week, the US Federal Reserve indicated it could hike its interest rate one more time and is likely to keep rates elevated for an extended period.
This pushed up US Treasury yields, which have an impact on the international borrowing costs for local banks.
US short-term Treasury yields rose 5-10 basis points after the decision. Two-year rates are now at their highest level since 2006 (5.16 per cent).
In New Zealand, the Reserve Bank meets again to consider the Official Cash Rate next Wednesday (October 4).
The OCR currently sits at 5.5 per cent - which the Reserve Bank has previously indicated will be the peak.
But the stronger economy has markets pricing in another rise to 5.75 before the end of the year.
“The unexpectedly strong rebound in growth last quarter means that the RBNZ’s next meeting in October will be a live one,” said Abhijit Surya, at Capital Economics.
“Given how noisy the recent activity data have been, it is difficult to definitively parse the implications for monetary policy. However, we now think that risks are tilted towards further rate hikes.”
ANZ economists, who have long forecast there’ll be another hike, don’t see it coming next week.
The GDP data was not a “game-changer for the October [4] Monetary Policy Review (we expect a hold), but it certainly increases the likelihood that the discussion takes a hawkish tilt,” said senior economist Miles Workman.
However, by the time we got to the crunch in November, the third-quarter inflation and labour market data would matter a great deal more than this GDP number, he said.
HSBC economist Paul Bloxham agreed.
“The upcoming election on October 14, and likelihood that the RBNZ will want to wait for the [third quarter] Consumer Price Index on October 17, means we have pencilled the hike in for November,” he said.
But he pushed back his expectation for rate cuts until late 2024.
Even if the OCR doesn’t rise again, the economic strength suggested rates would need to stay at elevated levels for longer, said ASB economist Nathaniell Keall.
“The RBNZ has signalled a high hurdle to further OCR moves in either direction, and most forecasters still expect New Zealand’s growth to slow from here,” said Keall.
“At the least, the continued resilience in activity highlights the risk that OCR settings will need to remain tight for a prolonged period to get inflation back into target.”