Overview
- The Reserve Bank of New Zealand raised the Official Cash Rate by 25 basis points to 2.50% on Wednesday, July 8, marking the shift from a multi‑year hold to active tightening.
- The bank said headline inflation likely peaked at 3.9% in the June quarter and is expected to return to the 2% midpoint by mid‑2027.
- Officials flagged that further OCR increases appear likely but stressed the timing depends on how firms set prices, wage trends, and spare capacity.
- The Monetary Policy Committee approved full divestment of its Large Scale Asset Purchase holdings by June 2027 and said that action will not add monetary stimulus.
- Committee members were split on risks to inflation and the decision exposed markets to volatility with the New Zealand dollar and borrowing costs set to remain sensitive to incoming data and RBNZ guidance.