Markets Outlook

BNZ expects the RBNZ to start a 25bp rate hike cycle in July 2026 to combat rising inflation (forecast to peak at 4.3%), even as the economy faces growth headwinds from Middle East conflict. The NZD is supported by this hawkish pivot and expectations of a 4.0% terminal OCR.

Key Takeaways

• 1.RBNZ has significantly raised inflation forecasts and lowered growth expectations, largely due to supply shocks from Middle East hostilities.
• 2.BNZ anticipates the RBNZ will begin a tightening cycle in July 2026, forecasting a peak OCR of 4.0% by mid-2027.
• 3.New Zealand's agricultural sector has shown massive debt reduction and deposit growth following Fonterra's $3.2b capital return.

Table of Contents

• Economic Pain in RBNZ Forecasts
• Global Watch
• Key Event Previews
• Fixed Interest Market
• Foreign Exchange Market
• Technicals
• Quarterly Forecasts
• Annual Forecasts
• Key Upcoming Events

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