NZ RBNZ Rate Statement

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.

The Monetary Policy Committee today agreed to hold the OCR at 2.25 percent. Since the February Monetary Policy Statement, events in the Middle East have materially altered the outlook and the balance of risks for inflation and economic growth in New Zealand. In the near term, inflation is expected to increase and the economic recovery to weaken. The Committee is vigilant to any generalised inflationary pressure and stands ready to act to return inflation to its medium-term target. The Middle East conflict has disrupted global supply chains, leading to significantly higher prices for oil and refined petroleum products. As a result, near-term inflation is increasing and economic growth is weakening in many countries. Global financial markets have been volatile and market interest rates have increased. In New Zealand, the extent of the near-term increase in headline inflation will depend on how the conflict in the Middle East evolves and the magnitude and duration of the disruption to global supply chains and energy markets. Medium-term inflationary pressure will depend on the extent to which higher costs influence price- and wage-setting behaviour by firms and workers in the economy. If medium-term inflation expectations increase, then inflation is likely to become more persistent. However, The Monetary Policy Committee today agreed to hold the OCR at 2.25%. • War in the Middle East has disrupted global supply chains, raising fuel prices. • Inflation is expected to increase in the short term and the economic recovery to weaken. The extent to which inflation… pic.twitter.com/3jrcuCgdUW RBNZ: Should these conditions not hold, timely and decisive increases in the OCR would be warranted. RBNZ: BY KEEPING THE OCR UNCHANGED, THE COMMITTEE IS WEIGHING THE BENEFITS OF ACTING EARLY AGAINST THE RISK OF UNNECESSARILY CONSTRAINING THE ECONOMIC RECOVERY. ... RBNZ: The Committee continues to monitor for widespread inflationary pressures and is prepared to take action if necessary to bring inflation under control.

Annual consumers price inflation was slightly above the Monetary Policy Committee’s 1 to 3 percent target band at the end of 2025. Increases in food and electricity prices and local council rates were the biggest contributors to above-target inflation. The economy is at an early stage in its recovery. With ongoing strength in commodity prices, economic activity in the agricultural sector and regional New Zealand remains strong. Although residential and business investment is increasing, households remain cautious in their spending. The labour market is stabilising, but unemployment remains elevated. House price growth remains weak, dampening household wealth and inclination to spend. In response to previous cuts in the OCR, economic growth is broadening across sectors of the economy, such as manufacturing, construction and some retail. Economic growth is expected to increase over 2026. Inflation is most likely returning to within the Committee’s 1 to 3 percent target band in the current quarter. The Committee is confident that inflatio The Monetary Policy Committee today agreed to keep the Official Cash Rate on hold at 2.25%. Inflation is expected to be back within our 1-3% target range in the first quarter of 2026. The economy is at an early stage of recovery, and growth is expected to increase over 2026. Any… pic.twitter.com/0RyKUNIFRZ RBNZ SAYS INFLATION IS LIKELY TO RETURN TO THE 1–3 PERCENT TARGET RANGE WITHIN THE CURRENT QUARTER. ... RBNZ says despite growth in residential and business investment, household spending continues to be cautious. RBNZ says as the recovery gains momentum and inflation moves steadily toward the midpoint of the target range, monetary policy will be normalized gradually.

Annual consumers price inflation increased to 3 percent in the September quarter. However, with spare capacity in the economy, inflation is expected to fall to around 2 percent by mid-2026. Economic activity was weak over mid-2025 but is picking up. Lower interest rates are encouraging household spending, and the labour market is stabilising. The exchange rate has fallen, supporting exporters’ incomes. Global economic growth has benefited from strong AI-related investment but is expected to slow in 2026 as trade barriers weigh on activity. Risks to the inflation outlook are balanced. Greater caution on the part of households and businesses could slow the pace of New Zealand’s economic recovery. Alternatively, the recovery could be faster and stronger than expected if domestic demand proves more responsive to lower interest rates. The Committee voted to reduce the OCR by 25 basis points to 2.25 percent. Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolve. RBNZ: LOWER INTEREST RATES ARE ENCOURAGING HOUSEHOLD SPENDING, AND THE LABOUR MARKET IS STABILISING RBNZ SEES OFFICIAL CASH RATE AT 2.25% IN MARCH 2026 (PVS 2.55%) Looks like a hawkish cut RBNZ: Inflation likely to fall to near 2% by mid-2026, supported by spare economic capacity. RBNZ minutes show the committee voted 5-1 to cut the OCR by 25 bps to 2.25%. RBNZ: After a weak mid-2025, the economy is beginning to gain momentum.