The Reserve Bank has increased the Official Cash Rate (OCR) by 25 basis points to 2.50%, signalling that further tightening may be required as it works to return inflation to its 2% target.
The Monetary Policy Committee said the recent partial reopening of the Strait of Hormuz had driven oil and other petrochemical prices lower, easing short-term inflation pressures. However, it warned that the effects of the earlier energy shock would continue to influence the economy and that uncertainty remained over the outlook for medium-term inflation.
The Committee said New Zealand’s economic recovery had been gathering pace before the Middle East conflict but lost momentum during the June quarter as higher energy costs weighed on activity. It expects growth to resume in the September quarter as those impacts diminish and business and consumer confidence improves.
Internationally, the Reserve Bank said global growth had remained resilient despite trade tariffs and conflict in the Middle East, supported by investment in artificial intelligence, defence, and economic security. While inflation has risen across New Zealand’s major trading partners, it is expected to ease towards 2% by 2027. Financial markets are also anticipating higher global interest rates than before the conflict, reflecting concerns that elevated energy costs could keep inflationary pressures alive.
Domestically, the Reserve Bank said spare capacity in the economy should limit businesses’ ability to pass higher costs on to consumers, although some firms may attempt to rebuild profit margins as demand strengthens. It also noted that a weaker New Zealand dollar could add to inflation if sustained.
With inflation still above target and economic activity expected to strengthen, the Committee said additional reductions in monetary stimulus were likely to be needed. It said future OCR decisions would depend on incoming economic data, pricing behaviour by businesses, and the persistence of medium-term inflation pressures.
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Why are we letting foreign Jew bankers dictate our interest rates in NZ. They print our money from fresh air then charge us interest for our own money.
“Let me issue and control a nation’s money and I care not who writes the laws.” Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.
“The modern banking system manufactures money out of nothing. The process is, perhaps, the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and un-mint the modern ledger-entry currency.” Major L L B Angus.
“It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford, founder of the Ford Motor Company.