RBNZ Lifts OCR to 2.5% as Inflation Risks Persist

The Reserve Bank of New Zealand's (RBNZ) monetary policy committee raised the official cash rate (OCR) by 25 basis points to 2.5%, citing the need to continue reducing monetary stimulus as inflation remains above target despite easing global energy price pressures, according to a Wednesday statement. The committee said the partial reopening of the Strait of Hormuz had lowered global oil and petrochemical prices, reducing immediate inflation pressures, but cautioned that the lingering impact of the energy shock could keep the medium-term inflation outlook uncertain. Global growth has remained robust despite tariffs and Middle East tensions, driven by artificial intelligence investment and increased spending on defense and economic security, while inflation among New Zealand's trading partners has risen but is expected to decline toward 2% by 2027. The committee noted that New Zealand's economic recovery, which had begun before the conflict, slowed in the June quarter due to the oil shock but is expected to regain momentum in the September quarter as the impact fades and confidence returns. It expects inflation to return to target, improving household purchasing power and.