Market odds for a July 8 RBNZ hike have slipped to around 70% as crude prices ease near-term inflation pressures.
The Reserve Bank of New Zealand is expected to raise its cash rate by 25 basis points on July 8, though market conviction has softened. Hike probabilities have fallen to roughly 70%, down from over 80% a week ago, as crude oil prices retreat to around USD68 a barrel from the USD101 assumed in the RBNZ’s May projections.
Weaker labor market data and a softer New Zealand dollar have added complexity to the decision. While fuel and CPI pressures have eased, the NZD’s decline is seen as inflationary, reinforcing the case for tightening. Traders remain positioned for a hike but are not fully pricing a downside surprise.
The RBNZ’s tightening bias remains intact, though the outlook is clouded by oil volatility and mixed economic signals. Market reaction could hinge on whether the central bank signals further hikes or a pause.