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2026-05-26 08:47:49
[The Reserve Bank of New Zealand is expected to keep interest rates unchanged this week; hawkish comments under the risk of stagflation may temporarily boost the New Zealand dollar] (1) The market generally expects the Reserve Bank of New Zealand to keep the official overnight cash rate (OCR) unchanged at 2.25% on Wednesday. A survey shows that 28 out of 29 economists hold this expectation; however, due to widespread inflation concerns caused by the war in Iran, slightly more than half of the economists expect at least one rate hike before the end of the year. (2) New Zealand is completely dependent on imported fuel (since the last refinery closed in 2022), and is extremely vulnerable to fluctuations in oil prices. The first quarter CPI remained stable at 3.1%, which is already higher than the central bank's target range of 1%-3%; the war has further exacerbated inflationary pressures, putting the tightening of monetary policy on the agenda. However, the economy has not yet recovered: the GDP growth rate in the fourth quarter of last year was only 1.3% year-on-year, and although the unemployment rate fell slightly to 5.3%, it is still close to a 10-year high. (3) New Zealand faces the reality of stagflation, and monetary policy alone is not a panacea; it needs to be combined with targeted fiscal intervention. If the Reserve Bank of New Zealand makes hawkish comments on Wednesday, the New Zealand dollar will likely move closer to the May high of 0.5991 against the US dollar in the short term, but strong resistance levels and a generally weak macroeconomy will limit the upward momentum.
