New Zealand’s central bank is expected to pause rate hikes as July inflation data shows easing price pressures, reducing near-term tightening risks.
The Reserve Bank of New Zealand (RBNZ) is unlikely to raise interest rates at its September meeting following softer inflation data, analysts said. July’s Selected Price Index fell to 3.5% year-over-year from 4.9% in June, signaling cooling price pressures.
Core inflation, excluding volatile fuel costs, dropped to 2.2% in July from 2.8% in June. While the RBNZ may maintain a hawkish stance due to Middle East risks, the weaker economic backdrop and easing inflation reduce the urgency for further hikes after July’s increase.
The Kiwi dollar may find near-term support from the central bank’s tone but faces longer-term headwinds from a sluggish economy.