Trump's moving tariff targets could add another layer of uncertainty to the Fed's rate decisions

The Monetary Policy Committee today agreed to hold the Official Cash Rate at 3.25 percent. Annual consumers price inflation will likely increase towards the top of the Monetary Policy Committee’s 1 to 3 percent target band over mid-2025. However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2 percent by early 2026. Elevated export prices and lower interest rates are supporting a recovery in the New Zealand economy. However, heightened global policy uncertainty and tariffs are expected to reduce global economic growth. This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures. The economic outlook remains highly uncertain. Further data on the speed of New Zealand’s economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the Official Cash Rate. If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the Official Cash Rate further. RBNZ: ANNUAL CONSUMERS PRICE INFLATION WILL LIKELY INCREASE TOWARDS THE TOP OF THEMONETARY POLICY COMMITTEE'S 1 TO 3 PERCENT TARGET BAND OVER MID-2025. THE ECONOMIC OUTLOOK REMAINS HIGHLY UNCERTAIN HOWEVER,WITH SPARE PRODUCTIVE CAPACITY IN THE ECONOMY AND DECLINING DOMESTIC… RBNZ MINUTES: COMMITTEE EXPECTS TO LOWER THE OFFICIAL CASH RATE FURTHER, BROADLY CONSISTENT WITH THE PROJECTION OUTLINED IN MAY CASE FOR KEEPING THE OCR ON HOLD AT THIS MEETING HIGHLIGHTED THE ELEVATED LEVEL OF UNCERTAINTY, AND THE BENEFITS OF WAITING UNTIL AUGUST IN LIGHT OF…