NZ: OCR held at 2.25%

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. ...

In the 12 months to April 2026: • The Consumer Price Index (CPI) rose 4.2%, down from 4.6% in the 12 months to March 2026. • The largest contributors to annual inflation were ...