New Zealand’s latest RBNZ Survey of Expectations showed a sharp rise in near-term inflation expectations, reinforcing concerns that price pressures may remain elevated even as growth slows. One-year-ahead CPI inflation expectations jumped from 2.59% to 3.41%, while two-year expectations rose from 2.37% to 2.53%, moving further above the Reserve Bank of New Zealand’s medium-term inflation target midpoint.
The survey, conducted shortly after official data showed annual CPI inflation holding at 3.1% in Q1, also pointed to a more hawkish interest rate outlook. Respondents lifted their expectation for the Official Cash Rate at the end of the June quarter from 2.25% to 2.34%. The one-year-ahead OCR expectation rose sharply from 2.58% to 3.01%. The shift suggests markets increasingly believe the RBNZ may need to raise interest rates amid persistent inflation pressures.
At the same time, the survey revealed a softer growth outlook. Expectations for one-year-ahead real GDP growth fell from 2.03% to 1.58%, while the two-year outlook eased from 2.30% to 2.16%.
Indicator
Previous
Latest
Annual CPI Inflation
3.1%
3.1%
1-Year Ahead CPI Expectations
2.59%
3.41%
2-Year Ahead CPI Expectations
2.37%
2.53%
5-Year Ahead CPI Expectations
2.31%
2.22%
10-Year Ahead CPI Expectations
2.30%
2.19%
OCR Expectation (End-Jun 2026)
2.25%
2.34%
1-Year Ahead OCR Expectations
2.58%
3.01%
1-Year Ahead GDP Growth Expectations
2.03%
1.58%
2-Year Ahead GDP Growth Expectations
2.30%
2.16%
