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New Zealand central bank holds rates but flags inflation risks

By Benjamin Chiou

Date: Wednesday 08 Apr 2026

(Sharecast News) - The Reserve Bank of New Zealand unanimously voted to keep interest rates unchanged on Wednesday, but said it remains "ready to act" if the fallout from conflict in the Middle East continues to ramp up inflationary pressures.
As expected by economists, the RBNZ's official cash rate was left at 2.25%, with all six Monetary Policy Committee members voting to hold.

The MPC said events in the Middle East, which have disrupted global supply chains and led to a spike in energy prices, had "materially altered" the outlook with inflation expected to increase and the economic recovery to weaken in the near term.

However, the net effect of the Iran war on medium-term inflation pressures will "depend on how the countervailing factors play out", noting that financial conditions had already tightened since the conflict began in late-February.

"If the increase in near-term inflation is largely temporary, the Committee envisages gradually moving the OCR to more neutral levels as activity recovers and near-term inflationary pressures dissipate," the RBNZ statement said.

"However, any signs of significant second-round inflationary effects or increases in medium-term inflation expectations would require decisive and timely increases in the OCR to re-anchor inflation expectations. The Committee is vigilant to these risks."

The latest official statistics showed that the annual rate of inflation across New Zealand stood at 3.1% over the three months to December, up from 3.0% the three months prior. That is expected to come back down to 3.0% in the March quarter, the RBNZ predicted, but ramp up to 4.2% in the June quarter - though there are "significant uncertainties around this forecast", it said.

"It will continue to assess the countervailing forces on the inflation outlook and stands ready to act decisively to ensure that inflation reaches the 2% mid-point of the target band in the medium term," the central bank said.

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