NZ RBNZ Monetary Policy Statement

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 ...

That is the main reason why, despite the worsened energy price story, markets are pricing close to zero (5bp) probability of a hike at the 27 May meeting, and consensus is unanimously calling for a hold at 2.25%. This is also our call, but we think markets are underestimating the chances of a surprise hike. If the April statement is taken at face value, raising rates as early as May would not be such an aberration (we explain why below). Some members had already argued in favour of an “early monetary policy response” in April. In any ...

The Bank continues to signal a very shallow tightening cycle, with the cash rate projected to reach just 3% by 2028, implying that policymakers see neutral settings near that level. That assumption warrants caution. The RBNZ has a history of misjudging the pace and magnitude of policy shifts, having previously underestimated how far and fast rates needed to be reduced during the prior easing cycle. My view remains that risks are skewed towards earlier and greater tightening than currently projected, reflecting the incoming boost to ...

The latest RBNZ projections from November 2025 have proved too optimistic on disinflation. Fourth‑quarter CPI came in at 3.1% YoY versus the bank’s 2.7% estimate, and non‑tradable CPI at 3.5% versus the 3.2% projection. This raises the question of whether the RBNZ cut rates too aggressively last year. The next few quarterly prints may be a make‑or‑break moment for NZD. Another hot reading could leave the RBNZ with little choice but to start considering rate hikes later this year. However, the 1Q CPI report is only published on 20 ...