New Zealand Inflation Expectations

The Reserve Bank of New Zealand’s (RBNZ) quarterly survey of expectations showed that business managers forecast inflation at 2.28% for the next two years in Q4 2025, unchanged from the previous three-month period. Meanwhile, one-year inflation expectations edged up slightly to 2.39% from 2.37%, suggesting that price pressures are expected to stay contained in the near term. Longer-term views were mixed, with five-year-ahead inflation expectations easing to 2.22% from 2.26%, while ten-year expectations inched higher to 2.18% from 2.15%. In terms of monetary policy, respondents now expect the Official Cash Rate (OCR) to stand at 2.25% by the end of December 2025, notably lower than the 3.02% forecast in the previous quarter, before rising modestly to 2.31% by September 2026. The adjustment follows the RBNZ’s recent decision to cut the OCR by 50 basis points to 2.50% on 8 October 2025.