MNI RBNZ Preview-April 2026: Ongoing Pause, Weak Outlook

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EXECUTIVE SUMMARY: 

• The RBNZ is unanimously expected to leave rates unchanged at 2.25% when the MPC announces its decision on 8 April. It continues to believe that ongoing substantial excess capacity will put downward pressure on inflation bringing it back to the band.
• The uncertainty around the implications of the Iran War and the duration of elevated fuel prices have weighed on the economy at a time of a nascent recovery, which is likely to add to the MPC’s sentiment to stay on hold for some time.
• Market pricing for tomorrow's RBNZ meeting outcome shows very little risk of a tightening, with just a 6% chance implied by OIS markets (current policy rate is 2.25%). A full hike is more than fully priced by the September meeting, with an OIS implied policy rate of 2.57%.