New Zealand Central Bank Raises Official Cash Rate by 25 Basis Points to 2.50%

New Zealand’s central bank raised the Official Cash Rate (OCR) by 25 basis points to 2.50%, with its Monetary Policy Committee voting unanimously. According to Jin10, the committee said global oil prices fell sharply as the Strait of Hormuz partially reopened, and prices of other petrochemical products also declined, easing near-term inflation pressures. The committee said that despite lower energy prices, the effects of the energy shock would persist for some time, leaving the outlook for medium-term inflation pressures uncertain. It added that the current monetary policy stance aims to return inflation to the target level while avoiding unnecessary economic instability. The central bank said New Zealand’s economy had already been on a recovery path before the Middle East conflict, but momentum weakened in the June quarter due to the drag from the oil price shock. It said the outlook for medium-term inflation pressures depends on how much recent cost increases are passed through into higher prices. With inflation still above the target level and economic activity expected to strengthen, the committee said further reductions in monetary policy stimulus may be needed to bring inflation back to the 2% target midpoint. The committee said future interest-rate decisions will depend on newly released economic data, price-setting behavior, and how the strength of economic activity affects medium-term inflation pressures.