MNI RBNZ Review-May 2026: Hike Likely At “Coming Meetings”

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EXECUTIVE SUMMARY: 

• The RBNZ left rates at 2.25%, as was unanimously expected, but it was a very close decision with the 3 central bank MPC members voting for unchanged policy while the 3 external ones voting for a 25bp hike. Governor Breman used her casting vote to leave policy on hold.
• In the press conference, Governor Breman said that the OCR is likely to rise at “coming meetings” but she wouldn’t commit to timing.  With the Q3 average OCT projection, there is a risk of 25bp hikes at both the 8 July and 2 September meetings.
• The focus will be on not allowing increased costs to become embedded with the pace determined by balancing upside risks to medium-term inflation with ongoing weaker demand.
• RBNZ-dated OIS pricing for the July meeting sits at 87% versus 66% before yesterday’s decision.