NZ RBNZ Rate Statement

The Reserve Bank of New Zealand increased the Official Cash Rate by 25 basis points to 2.50% at its July meeting. Committee members justified the decision by pointing out that inflation remains above target, growth is expected to accelerate over the next six months and that the prevailing level of the OCR was judged to be stimulatory. The Monetary Policy Committee indicated that additional removal of monetary stimulus is likely if the economy evolves as expected. The decision was unanimous, a notable shift from the split decision ...

The Reserve Bank (RBNZ) has raised the Official Cash Rate (OCR) to 2.50% from 2.25%, saying that although oil prices have fallen, the effects of the oil shock will linger for some time. The RBNZ's six-member Monetary Policy Committee (MPC) reached consensus on raising the OCR by 25 basis points to 2.50%. This marks the first time since May 2023 the RBNZ has increased the OCR. “Although energy prices have decreased, the effects of the shock will linger for some time and the outlook for medium-term inflation pressures remains ...

The Reserve Bank of New Zealand once again faces an important policy decision with limited information. Key data is published only quarterly, and since the 27 May meeting, only first-quarter GDP figures have been released, with 2Q CPI and labour market data due on 20 July and 4 August. For what it's worth, growth was fairly robust in 1Q at 0.8% quarter-on-quarter, close to the 1.0% RBNZ estimate. Back in May, the RBNZ kept rates on hold at 2.25% in a 3-3 split decision, with Governor Anna Breman casting the tiebreaking vote. The ...

The May monetary policy statement's signals come to us through the fog of war. Its forecasts, and forward guidance, should be read as accompanied by; “At least that’s our best guess, but at this stage who knows?” The key uncertainty, of course, is how long the Strait of Hormuz will remain closed and therefore how close we are to moving from what is so far a price shock to physical shortages of transport fuels. And in that case, how much will access to the inadequate supply be determined by official rationing and how much by the brute ...

In quiet markets, focus in the G10 FX space has switched to New Zealand. The previously dovish RBNZ came very close to a rate hike last night, with a split 3-3 vote being decided in favour of a hold by the governor Anna Breman. In his RBNZ preview, Francesco Pesole had warned about the hawkish risks, including an upward revision to the forecast path for the policy rate. In the end, the upward revisions were even more aggressive than market pricing. Instead of gradually taking the policy rate to 3.00% by the end of 2028 as outlined in ...

New Zealand mortgage advisers should prepare clients for higher borrowing costs after the Reserve Bank held the Official Cash Rate at 2.25% on Wednesday — but only by the narrowest of margins, with the committee split and chairperson Governor Anna Breman casting the deciding vote to hold. The Monetary Policy Committee voted three to three on whether to hold or raise the OCR by 25 basis points. With the vote tied, Breman exercised her casting vote in favour of holding. The committee was unambiguous about what comes next. "The ...

Like several other inflation-targeting central banks that have turned increasingly hawkish recently, the RBNZ appears prepared to torch the domestic economy to reduce the risk of inflation expectations becoming untethered. Swaps traders boosted their pricing for the RBNZ to join the global rate hiking cycle in July, pushing the implied probability up to 85% from 70% beforehand. By the time the general election is held in November, over two full hikes are now priced, with a third seen by December and a fourth by March. While slightly ...