New Zealand’s central bank signals earlier rate hikes and a higher OCR path, supporting the Kiwi despite US growth outperformance.
The Reserve Bank of New Zealand held its Official Cash Rate at 2.25% but delivered a hawkish stance in a 3-3 split vote, with Governor Anna Breman’s casting vote securing the hold. Three members pushed for a 25bps hike, reflecting heightened tightening expectations.
The RBNZ revised its OCR path upward, now projecting 150bps of tightening over three years, with a first 25bps hike implied in Q3 instead of Q1 2027. Total tightening by 2029 is now seen at 100bps, up from 75bps previously.
Despite the hawkish shift, NZD/USD is expected to remain in a 0.5800–0.6000 range near term, as stronger US growth relative to New Zealand caps upside.