RBNZ: Expected to maintain current rates due to uncertain outlook from conflict – Commerzbank

RBNZ Expected to Hold Rates Steady Amid Global Uncertainty

Volkmar Baur of Commerzbank anticipates that the Reserve Bank of New Zealand (RBNZ) will maintain its current interest rates at the upcoming April meeting. This decision comes despite the Reserve Bank of Australia’s recent rate increase and the ongoing instability caused by the Third Gulf War. Market participants see almost no likelihood of an immediate rate adjustment, with any potential tightening postponed until the latter half of 2026 and largely influenced by international events rather than domestic indicators.

RBNZ Maintains a Cautious Approach Following Gulf War Developments

“The RBNZ is scheduled to hold its second monetary policy meeting of the year early tomorrow morning (GMT), marking its first session since the onset of the Third Gulf War. While the Reserve Bank of Australia opted to raise rates roughly three weeks ago, I do not foresee the RBNZ making a similar move at this time.”

“Currently, markets are assigning only a 5% probability to a rate hike, and none of the analysts surveyed by Bloomberg predict an increase in April. Since the conflict began, expectations for additional rate hikes this year have grown.”

This market sentiment is consistent with comments made by Governor Anna Breman in late March. She emphasized that, as a forward-looking central bank, it is important to look past immediate supply shocks—such as those resulting from the current conflict—when making policy decisions for New Zealand.

“Nevertheless, Governor Breman also highlighted that the central bank should not delay action until secondary effects on inflation become evident. In the weeks and months ahead, the RBNZ will focus more closely on real-time price trends, wage growth, and shifts in inflation expectations, rather than waiting for traditional inflation data.”

“Tomorrow’s meeting will likely provide further insight into the RBNZ’s perspective and its planned response to these challenges. While a rate hike at the May meeting remains a possibility, any such move would probably be driven more by international factors, particularly the Gulf War, than by domestic economic conditions.”

“Any decision other than keeping rates unchanged would be highly unexpected and could significantly impact the New Zealand dollar.”

(This article was produced with the assistance of an AI tool and reviewed by an editor.)