The Reserve Bank of New Zealand raises its Official Cash Rate to 2.5%, signaling further tightening to combat inflation.
The Reserve Bank of New Zealand (RBNZ) raised its Official Cash Rate by 25 basis points to 2.5% at its July meeting, exceeding market expectations for a hawkish stance. The decision was unanimous, a shift from May’s split vote, underscoring the central bank’s focus on curbing inflationary pressures.
RBNZ projections show inflation peaking at 3.9% in Q2 before easing toward the 2% target by mid-2027. The bank indicated additional monetary tightening may be necessary to sustainably return inflation to its midpoint range. NZD/USD rose 0.56% to 0.5730 following the announcement.
Gains were capped by softer-than-expected inflation data from China, New Zealand’s largest trading partner, and geopolitical tensions supporting the USD. China’s June CPI rose 1% YoY, below the 1.1% consensus, while monthly inflation fell 0.3%.