New Zealand's inflation expectations rose to a one-year high in the second quarter, according to a Reserve Bank of New Zealand (RBNZ) survey released Friday. The data comes as markets anticipate a potential interest rate cut when the central bank meets later this month.
The RBNZ's quarterly survey showed that two-year inflation expectations—considered a key gauge for when monetary policy changes affect consumer prices—rose to 2.29%, up from 2.06% in the first quarter. This figure remains within the RBNZ’s official inflation target range of 1% to 3%.
The survey, which polled 42 business leaders and professional forecasters, also revealed that annual inflation expectations for the year ahead increased to 2.41%, compared to 2.15% in the previous quarter. These rising forecasts reflect lingering price pressures in the economy, despite a slowdown in overall inflation from earlier peaks.
The central bank has held rates steady since its last hike in May 2023, maintaining the official cash rate at 5.5%. However, with recent signs of economic cooling and inflation expectations still anchored within the target range, some analysts believe the RBNZ may soon consider easing policy to support growth.
Market participants are closely watching the upcoming rate decision as they weigh the RBNZ’s balancing act between containing inflation and avoiding a deeper economic slowdown. Any shift in tone or policy stance could influence the New Zealand dollar and broader financial markets.
The latest inflation outlook suggests that while price pressures remain moderate, sentiment among forecasters is turning cautious, potentially setting the stage for a policy pivot in the coming months.


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