New Zealand raises its cash rate to 2.50%, a first increase since 2023

The Reserve Bank of New Zealand raised the official cash rate by 25 basis points to 2.50% on July 8, from 2.25%. It was the first increase since May 2023. The six-member committee reached consensus, unlike May, when Governor Anna Breman used a casting vote to break a three-to-three split. The Bank said that after the partial reopening of the Strait of Hormuz, global oil prices fell markedly and near-term inflation pressures eased. It expects annual headline inflation to have peaked at 3.9% in the June quarter and to fall to 3.3% in the September quarter, returning to the 2% mid-point in mid-2027. Ella Somers at interest.co.nz reported that Prasanna Gai and Hayley Gourley saw inflation risk to the upside, with four members calling it balanced. Further increases are likely, the Bank said, on timing it called highly uncertain. Domestic activity slowed.