Australia and New Zealand central banks expected to tighten policy as inflation stays high

New Zealand’s Reserve Bank (RBNZ) is forecast to raise the Official Cash Rate in its July monetary policy review after a split 3‑3 vote in May. UBS analysts expect the July vote to move toward unanimity, citing a need to prevent inflation expectations from becoming de‑anchored. Inflation for the March quarter was 3.1% year‑on‑year, above the RBNZ’s 1‑3% target. Westpac economists also project the OCR will stay at 2.25% in July but anticipate another tightening move in September and a final hike by December.

In Australia, Reserve Bank deputy governor Andrew Hauser said three consecutive rate hikes this year should not trigger a sharp rise in unemployment, even as core inflation climbed to 3.6%. He warned that inflation remains “far too high” but expects the jobless rate to rise only modestly from 4.3% to about 4.7% over the next two years. The RBA aims to bring inflation back to the 2‑3% target range by late next year while keeping the labour market strong.