RBNZ: The road to normalization

Research evidence excerpt

RBNZ: The road to normalization

J P M O R G A N Australia Economic Research

08 July 2026

The RBNZ hiked 25bp at the July meeting, an outcome consistent with J.P. Morgan Economic and Policy Research

and consensus forecasts. The forward guidance remains hawkish but data Tom Kennedy

dependent, noting “ some further reduction in monetary stimulus is likely to be (61-2) 9003-7981

required to return inflation to the 2% target mid-point. Future OCR decisions will tom.kennedy@jpmorgan.com

depend on how incoming data, price-setting behaviour, and the strength of J.P. Morgan Securities Australia Limited

economic activity affect medium-term inflation pressures”.

Today’s minutes provided an update on the RBNZ’s inflation forecast with the

Bank now expecting headline to peak at 3.9%oya in Jun-2026 (prior: 4.2%oya),

before declining to 3.3%oya in Sep-2026 (prior: 4.3%oya). While the 2Q forecast

is broadly aligned with our view, the downshift from early 2H26 is meaningful and

implies a quarterly run rate of just 0.4%q/q. This is a low hurdle given the current

inflation backdrop and we attach some upside risk to this forecast. We retain our

view for the RBNZ to lift the cash rate by 25bp in September.

Unlike the prior meeting’s 3-3 split, today’s policy vote seemed orderly with the

Committee reaching consensus. The attributed inflation discussion outlined in the

minutes reveals inflation was the main topic of debate with external members Gai

and Gourley still flagging upside risks, while Hansen and the three internal

members view inflation dynamics as more balanced. The ensuing debate

unsurprisingly focused on global energy prices and the pass-through to other

pockets of the CPI basket, with this transmission likely to be decisive for the future

path of monetary policy.