The Reserve Bank of New Zealand (RBNZ) kept its official cash rate unchanged at 2.50%, matching market expectations. The policy committee approved a 25 basis point increase, citing persistent inflation above target and stronger-than-expected economic activity. The committee noted that further tightening may be required to bring inflation back to the 2% target, but the timing of any additional hikes remains uncertain. The RBNZ emphasized that its goal is to return inflation to the target range without creating unnecessary economic instability.
The decision follows a decline in energy prices, yet the effects of earlier shocks continue to influence the economy. Inflation is projected to peak at 3.9% in the June 2026 quarter and then fall to 3.3% by September. The RBNZ expects the annual inflation rate to return to the middle of its target band by mid‑2027. The policy stance remains supportive of the economy, with the committee monitoring both upward and downward risks to the medium‑term inflation outlook.
Following the rate hike, the New Zealand dollar rose 0.5% to $0.5703 against the U.S. dollar.