Doves Win the Battle But Hawks Will Win the War

The RBNZ held rates at 2.25% but signaled a hawkish shift with a split vote, leading RBC to forecast a July hike despite fears of stagflation.

Key Takeaways

• 1.The RBNZ maintained the Official Cash Rate (OCR) at 2.25% following a split 3-3 committee vote, but signaled aggressive rate hikes for later in 2026.
• 2.RBC analysts disagree with the RBNZ's hawkish tilt, citing a widening output gap and rising unemployment as significant risks that the central bank is overlooking.
• 3.RBC now forecasts the RBNZ will raise the OCR to 2.50% in July, purely as a prediction of the central bank's behavior rather than a recommendation.

Table of Contents

• OCR track shunted higher
• Output gap set to widen further
• Stinks of stagflation
• Headline heads higher
• Unemployment set to stay high
• Disclaimer

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