New Zealand’s central bank is expected to hold rates steady while revising forecasts to reflect a higher terminal rate near 3.2%.
The Reserve Bank of New Zealand is poised to leave its official cash rate unchanged at 2.25% during today’s Monetary Policy Statement. However, the bank is expected to deliver hawkish forecasts, with the terminal rate projected to rise to around 3.2% amid persistent inflation pressures.
Inflation is forecast to exceed 4% and remain elevated through much of 2026, driven by surging refined fuel costs linked to geopolitical tensions. Growth projections for 2026 have been slashed to 1.8-2.0%, down from 2.8% in February, while unemployment is seen ending the year in the mid-5% range.
Markets anticipate two to three rate increases this year, with the December 2026 OCR projection moving to approximately 2.8%. The debate among policymakers centers on timing, as hawks emphasize rising inflation expectations and low real interest rates.