The Reserve Bank of New Zealand (RBNZ) is expected to deliver a 25 basis points cut at Wednesday's policy meeting, according to 90% of Westpac clients, with a further 5% expecting a 50 basis points cut, in line with market pricing and Westpac's forecast for a 25 basis points cut, the bank said in a Monday report.

The remaining 5% expect that the RBNZ will leave the official cash rate on hold, all of whom are New Zealand-based.

The majority of respondents expect that the RBNZ will start to tighten policy in 2026. Client expectations are a little more hawkish than financial markets' pricing, the report added.

The bank believes that the RBNZ will continue to take a cautious view of the short-term growth outlook, and some monetary policy committee members are likely to remain pessimistic.

The bank noted that the tone of data since the October policy meeting has been mixed. Further, while signs of recovery are emerging, a significant turn in spending or business activity at this stage is yet to be seen.

Also, while the headline inflation has picked up to 3%, core inflation is closer to 2% and is expected to remain contained in 2026.

The bank added that its clients in New Zealand are evenly split on whether the Reserve Bank of Australia (RBA) or RBNZ will tighten policy first, but offshore clients think it's a little more likely that the RBA will be first.