Breman Speech: RBNZ Governor speaks on policy outlook after raising interest rate
Reserve Bank of New Zealand’s (RBNZ) Governor Anna Breman presents the prepared remarks on the Monetary Policy Review (MPR) and responds to media questions at the press conference after the July monetary policy announcement.
Earlier on, Breman and her colleagues announced the decision to raise the Official Cash Rate (OCR) by 25 basis points (bps) to 2.50%, as widely anticipated.
RBNZ press conference key quotes
Inflation could have already peaked.
Economy rebounding as oil prices decline.
Gradually shifting rates toward neutral.
Neutral rate uncertain, range 2.5% to 3.5%.
Feeling our way on policy to identify neutral rate.
Felt we needed to stress that uncertainty had increased on rate timing.
This section below was published at 02:00 GMT following the Reserve Bank of New Zealand (RBNZ) monetary policy announcements.
The Reserve Bank of New Zealand (RBNZ) announced on Wednesday that it raised the Official Cash Rate (OCR) by 25 basis points (bps) to 2.50% from 2.25% following the conclusion of the June monetary policy meeting.
The decision came in line with the market expectations.
Summary of the RBNZ Monetary Policy Review (MPR)
OCR increased to 2.50% to return inflation to 2%.
The monetary policy committee today reached consensus to increase the OCR by 25 basis points to 2.50 percent.
With inflation still above target and economic activity expected to strengthen, some further reduction in monetary stimulus is likely to be required to return inflation to the 2 percent target mid-point.
Future OCR decisions will depend on how incoming data, price-setting behaviour, and the strength of economic activity affect medium-term inflation pressures.
The monetary policy committee today reached consensus to increase the OCR.
Outlook for medium-term inflation pressures depends on the extent to which recent cost increases feed through into higher prices.
Although energy prices have decreased, the effects of the shock will linger for some time and the outlook for medium-term inflation pressures remains uncertain.
The stance of monetary policy is calibrated to bring inflation back to target without causing unnecessary economic instability.
Minutes of the RBNZ interest rate meeting
The committee reached consensus to increase the OCR by 25 basis points to 2.50 percent.
Committee noted that supply chains were likely to take time to adjust and that considerable geopolitical uncertainty remained.
The committee agreed that while further OCR increases appear likely at upcoming meetings, their timing is highly uncertain.
Forecast for near-term inflation has declined, given that current oil futures pricing is now significantly lower than assumed in the May statement.
Future OCR decisions will depend on the committee’s judgement about how price-setting behaviour and excess productive capacity affect medium-term inflation pressures.
The committee noted that financial conditions had eased in recent weeks.
Annual headline inflation is expected to have peaked at 3.9 percent in the June 2026 quarter, before declining to 3.3 percent in the September 2026 quarter.
Committee agreed that all these upside and downside risks are relevant for the medium-term inflation outlook and will be important for the monetary policy stance going forward.
Domestic economic growth is projected to resume in the September 2026 quarter. Lower fuel prices would support a recovery in spending.
GDP nowcasting model, Kiwi-GDP, currently predicts 0.6 percent growth in the September 2026 quarter.
NZD/USD reaction to the RBNZ interest rate decision
The New Zealand Dollar (NZD) catches fresh bids and extends higher in an immediate reaction to the RBNZ interest rate decision. The NZD/USD pair currently trades at 0.5702, up 0.43% on the day.
New Zealand Dollar Price This week
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies this week. New Zealand Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | -0.03% | 0.67% | 0.00% | -0.09% | 0.17% | 0.69% | |
| EUR | -0.25% | -0.30% | 0.39% | -0.28% | -0.31% | -0.11% | 0.39% | |
| GBP | 0.03% | 0.30% | 0.59% | 0.03% | -0.01% | 0.20% | 0.69% | |
| JPY | -0.67% | -0.39% | -0.59% | -0.68% | -0.63% | -0.44% | 0.00% | |
| CAD | -0.00% | 0.28% | -0.03% | 0.68% | 0.02% | 0.23% | 0.67% | |
| AUD | 0.09% | 0.31% | 0.00% | 0.63% | -0.02% | 0.20% | 0.70% | |
| NZD | -0.17% | 0.11% | -0.20% | 0.44% | -0.23% | -0.20% | 0.50% | |
| CHF | -0.69% | -0.39% | -0.69% | -0.01% | -0.67% | -0.70% | -0.50% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
This section below was published on July 8 at 21:15 GMT as a preview of the Reserve Bank of New Zealand (RBNZ) interest rate decision.
- The Reserve Bank of New Zealand is expected to raise the key interest rate to 2.50% on Wednesday.
- RBNZ Governor Breman’s words could offer fresh cues on the interest rate outlook.
- The RBNZ policy announcements are set to rock the New Zealand Dollar.
The Reserve Bank of New Zealand (RBNZ) is widely expected to raise the Official Cash Rate (OCR) by 25 basis points (bps) from 2.25% to 2.50% on Wednesday, snapping a three-consecutive-meeting pause.
Economists are deeply divided about how the Kiwi central bank will proceed this time after the last decision to hold the cash rate steady was a very close call, increasing the chances of higher volatility around the decision.
The RBNZ interest rate announcement is due at 02:00 GMT, accompanied by the Monetary Policy Review (MPR) and the Minutes of the meeting, followed by Governor Dr. Anna Breman’s press conference at 03:00 GMT.
The New Zealand Dollar (NZD) faces a key test this week as the RBNZ looks to hike the OCR against a backdrop of still-elevated inflation concerns, soft domestic economic activity, and sharply lower global Oil prices.
What to expect from the RBNZ interest rate decision?
Following May’s hawkish hold, Governor Breman cast the deciding vote after a 3-3 split between members favoring a hold and those backing an immediate hike.
That split was critical because it suggested the debate inside the Committee was more about when the tightening cycle should begin.
The case for a July lift-off remains strong as Breman said during the May post-policy meeting press conference that “current OCR is still a little bit on the accommodative side.”
Markets initially priced in an over 80% chance of a July hike after the May meeting. However, the sharp retracement in global Oil prices since then, alongside softer manufacturing and services readings, has prompted some analysts to push back their expectations for the RBNZ to initiate its rate-hiking cycle in September.
Further, the Committee voiced its concerns over increased costs not feeding elevated inflation over the medium term, adding that “the OCR will most likely need to increase sooner and by more than envisaged in the February monetary policy statement.”
Domestic fuel prices remain elevated relative to pre-Middle East war levels, limiting the near-term disinflation risks, even as lower Oil prices may reduce the urgency for an aggressive tightening cycle.
As a result, the key question for markets may not be whether the RBNZ hikes, but whether it will be a one-off increase or the beginning of a tightening cycle.
How will the RBNZ interest rate decision impact the New Zealand Dollar?
A July rate increase accompanied by cautious guidance would reinforce the view that the RBNZ is shifting toward a slower, more measured tightening path. That could weigh heavily on the NZD and, in turn, on the NZD/USD pair,
Conversely, the Kiwi Dollar could receive an additional boost to its recovery if policymakers signal that another move in September remains firmly on the table, as traders rebuild expectations for a more sustained hiking cycle.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“The pair extends its decline below all major moving averages. The 21-day simple moving average (SMA) at 0.5729 is the first cap overhead, while the longer-term 200-day, 50-day and 100-day SMAs clustered between 0.5820 and 0.5845 reinforce a broader topside barrier. The Relative Strength Index around 40 suggests weak momentum, hinting that sellers retain control but without immediate oversold conditions.
Sellers further remain hopeful as a Death Cross is in the making. The 50-day SMA is on the verge of crossing the 200-day SMA from above, which, if materialized on a daily closing basis, will confirm a strong bearish signal.
On the downside, strong support is seen at the June low of 0.5626. Below that, the November 2025 low of 0.5580 will be tested. Deeper declines will challenge the 0.5550 psychological level.”
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
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FXStreet Team
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