MNI RBNZ Preview-July 2026: Hike Or Hold???

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EXECUTIVE SUMMARY: 

• The 8 July RBNZ meeting decision is likely to be a very close call with both a 25bp hike and a continuation of the pause discussed. Bloomberg consensus is expecting the MPC to hike 25bp to 2.5% by 17/23 but domestic forecasters are split with three local banks and the NZIER shadow board believing that while it is a tight decision, the bank will continue to hold. 
• Reasons to hike are centred around accommodative monetary policy at a time of above target headline inflation and a recovering economy.
• Given that oil prices are now around $30/bbl below the RBNZ’s May assumption and so 2026 inflation is likely to be revised lower, the MPC may decide to be cautious and hold this month and wait for key Q2 data before the next meeting in September.
• 19bps of tightening is priced for tomorrow, while February 2027 assigns 72bps.