RBNZ MPC unanimously raised the official cash rate (OCR) by 25bps to 2.50%.
Partial reopening of the Strait of Hormuz pushed global oil and other
petrochemical prices sharply lower, easing near-term inflation pressure, but the
energy shock’s effects will persist and medium-term inflation remains uncertain.
Policy is set to return inflation to target while avoiding unnecessary economic
instability. New Zealand’s economy was on a recovery path before the Middle East
conflict; the oil shock weakened Q2 momentum. With inflation still above target
and activity expected to strengthen, further removal of monetary stimulus may be
required to return inflation to the 2% midpoint. Future rate decisions will
depend on incoming data, price-setting behaviour and the extent to which recent
cost increases pass through to consumer prices.
