The country's biggest bank believes interest rate cuts will arrive sooner than it previously expected.

The ANZ Bank has changed its official cash rate (OCR) forecast, now expecting the first cut to land in February, rather than May 2025.

The Reserve Bank (RBNZ) - in its May statement - indicated rate cuts would not arrive until the second half of next year.

In a note, ANZ New Zealand chief economist Sharon Zollner said "meaningful progress" on inflation was "around the corner".

"Before cutting the OCR, the RBNZ needs to not only be confident that CPI (consumer price index) inflation is on its way to 2 percent, but that it can be reasonably expected to subsequently stay within the 1-3 percent target band," Zollner said.

"But by February next year, we are anticipating that the RBNZ will have seen fourth quarter CPI inflation at 2.6 percent year-on-year - non-tradable (domestic driven inflation) still 4.7 percent year-on-year, but we are forecasting it to drop sub-4 percent the following quarter - and unemployment through 5 percent."

Zollner said that should be enough to trigger a rate cut.

It comes as the European Central Bank cut interest rates for the first time in five years, and the Bank of Canada became the first G7 nation to cut rates.

The US Federal Reserve - the world's most influential central bank - is expected to cut rates this year, starting in September.

Earlier this week, New Zealand economic consultancy Infometrics pushed out their rate cut call, from November 2024 to February 2025.

Financial markets have priced in a 25 basis point rate cut by November and close to 50 basis points by February.

ANZ said beyond February, it had pencilled a 25 basis point cut at each meeting. Also earlier this week, the NZ Institute of Economic Research said the RBNZ could always cut in 50 basis point chunks if it needed to.

"In our view, inflation data will soon start to make a more convincing case that the RBNZ is winning this war," Zollner said.

"We also expect that the RBNZ will take quite some convincing to actually cut the OCR, given it's in the nature of their mandate to be cautious when assessing the outlook for inflation."