NZ Official Cash Rate

The Monetary Policy Committee today reached consensus to increase the OCR by 25 basis points to 2.50 percent. Following the partial reopening of the Strait of Hormuz, global oil prices have fallen markedly. Other petrochemical prices have also moved lower. As a result, near-term inflation pressures have eased. Although energy prices have decreased, the effects of the shock will linger for some time and the outlook for medium-term inflation pressures remains uncertain. The stance of monetary policy is calibrated to bring inflation back to target without causing unnecessary economic instability. Global growth has been resilient to the effects of tariffs and conflict in the Middle East, largely because of strong AI-related investment and spending on defence and economic security. Headline inflation in New Zealand’s trading partners has increased but is expected to ease to close to 2 percent in 2027. Markets expect global policy rates to increase above pre-conflict levels, as central banks may need to respond to persistent energy-driven inflation pressures. New Zealand’s economic recovery was underway before the Middle East conflict, but lost momentum in the June quarter as the oil shock weighed on economic activity. Growth is expected to resume in the September quarter as these effects fade and confidence improves. Over the medium term, inflation returning to the 2 percent target mid-point will lift household purchasing power and help support a sustained recovery in growth and employment. The outlook for medium-term inflation pressures depends on the extent to which recent cost increases feed through into higher prices. Spare capacity in the economy is expected to limit firms’ ability to pass on higher costs, meaning many businesses may need to absorb them in margins. However, some firms may look to rebuild margins as demand recovers. If sustained, a lower exchange rate could also add to medium-term inflation pressures. With inflation still above target and economic activity expected to strengthen, some further reduction in monetary stimulus is likely to be required to return inflation to the 2 percent target mid-point. Future OCR decisions will depend on how incoming data, price-setting behaviour, and the strength of economic activity affect medium-term inflation pressures. The Monetary Policy Committee today agreed to raise the Official Cash Rate by 25 basis points to 2.50%. • Ongoing effects from the Middle East conflict will keep inflation elevated in the near term. • A drop in global oil prices has lowered costs and is supporting economic… pic.twitter.com/K2wp59XwE3 Just in | RBNZ Minutes Confirm Continued Accommodative Stance on Current OCR Level

The Monetary Policy Committee today voted to hold the OCR at 2.25 percent. Annual consumers price inflation was 3.1 percent in the March quarter. The Middle East conflict is increasing near-term inflation and weakening economic activity. Inflation is expected to peak at 4.3 percent in the September quarter and to return to the 2 percent target mid-point in mid-2027. Currently, core inflation, wage growth, and medium- to long-term inflation expectations remain consistent with inflation returning to the 2-percent target mid-point over the medium term. The global economic backdrop remains uncertain. Supply chain disruptions, higher prices for petrochemicals, and a more fragmented global trading environment are impacting the outlook. Growth will vary across countries, reflecting differences in energy intensity, fiscal support, and exposure to AI investment. On balance, New Zealand’s trading partners are expected to see weaker growth and higher inflation. Domestically, business contacts and surveys indicate weaker confidence and spending. For some firms, rising costs are squeezing profit margins and curbing investment and hiring intentions. Consumer confidence has fallen sharply, and the housing market remains weak. Economic conditions continue to differ across regions and sectors, with high commodity prices supporting incomes in regional New Zealand. The Monetary Policy Committee today voted to hold the Official Cash Rate (OCR) at 2.25%. • Prior to The Middle East conflict, New Zealand was showing signs of economic recovery. The conflict is increasing near-term inflation and weakening economic activity. • Inflation is… pic.twitter.com/RpKTLT9RHC RBNZ vote was 3-3 to hold with the chair voting to keep policy steady. Market was only 17% priced for a hike today. RBNZ SAYS INTEREST RATES MAY NEED TO INCREASE EARLIER AND MOVE HIGHER THAN OUTLINED IN THE FEBRUARY POLICY OUTLOOK. ... RBNZ Minutes revealed member Carl Hansen argued for an immediate rate hike to preserve flexibility for additional tightening in July.

Annual consumers price inflation was 3.1 percent in the March quarter. The Middle East conflict is increasing near-term inflation and weakening economic activity. Inflation is expected to peak at 4.3 percent in the September quarter and to return to the 2 percent target mid-point in mid2027. Currently, core inflation, wage growth, and medium- to long-term inflation expectations remain consistent with inflation returning to the 2-percent target mid-point over the medium term. The global economic backdrop remains uncertain. Supply chain disruptions, higher prices for petrochemicals, and a more fragmented global trading environment are impacting the outlook. Growth will vary across countries, reflecting differences in energy intensity, fiscal support, and exposure to AI investment. On balance, New Zealand’s trading partners are expected to see weaker growth and higher inflation. Domestically, business contacts and surveys indicate weaker confidence and spending. For some firms, rising costs are squeezing profit margins and curbing investment and hiring intentions. Consumer confidence has fallen sharply, and the housing market remains weak. Economic conditions continue to differ across regions and sectors, with high commodity RBNZ Says headline inflation is projected to climb to 4.3% in Q3 before easing back to the 2% target midpoint by mid-2027. RBNZ SAYS UNCERTAINTY CONTINUES TO SURROUND THE MEDIUM-TERM INFLATION OUTLOOK. ... RBNZ Says softer demand conditions and higher unemployment should help contain inflation pressures over time. RBNZ SAYS UNDERLYING INFLATION TRENDS, WAGE GAINS, AND LONGER-TERM EXPECTATIONS REMAIN ALIGNED WITH INFLATION EVENTUALLY RETURNING TO TARGET. ...