Markets price only a 15% chance of a hike as New Zealand’s central bank adopts a cautious stance on inflation and geopolitical risks.
The Reserve Bank of New Zealand is set to keep its policy rate unchanged at its meeting tomorrow, reflecting contained core inflation and anchored expectations. Analysts note the central bank’s wait-and-see approach contrasts with Australia’s recent rate hikes, as New Zealand prioritizes monitoring second-round effects.
Markets currently assign a 15% probability to a rate increase, underscoring expectations for steady policy. However, the NZD’s outlook remains vulnerable to oil price volatility driven by geopolitical tensions, particularly in Iran. Persistent conflict could weigh on the currency if energy costs rise further.