New Zealand’s central bank maintains its 2026 inflation projection after Q2 CPI exceeds both forecasts and its own estimates.
The Reserve Bank of New Zealand kept its Q2 2026 inflation forecast at 2.7% year-over-year, unchanged from its Q1 projection. The decision follows a stronger-than-expected Q2 CPI report, which rose 4.1% y/y and 1.5% q/q, surpassing both market forecasts and the RBNZ’s 3.9% estimate.
The RBNZ’s sectoral factor model, its preferred underlying inflation measure, remains steady despite the elevated Q2 print. Analysts had anticipated potential upward revisions to the 2026 forecast given the recent data, but the central bank’s unchanged projection suggests a measured response to near-term inflation pressures.
Markets are assessing whether the RBNZ’s stance signals confidence in inflation returning to target or a delay in policy adjustments. The forecast stability may ease immediate pressure on rate expectations, though the hot CPI print keeps inflation risks in focus.