Commerzbank’s Volkmar Baur anticipates that the Reserve Bank of New Zealand (RBNZ) will keep its policy rate unchanged at its April meeting, despite the Reserve Bank of Australia’s recent rate hike and the onset of the Third Gulf War, which has introduced significant global uncertainty [1]. The market has priced in only a 5% chance of a rate hike, and not a single analyst surveyed by Bloomberg expects the RBNZ to raise rates in April [1]. Since the outbreak of the war, market participants have begun to anticipate more rate hikes later in the year, but any further tightening is expected to be delayed until the second half of 2026 and will depend heavily on global developments rather than domestic economic data [1].
Governor Anna Breman’s comments from late March reinforce the central bank’s cautious stance, emphasizing the need to look beyond immediate supply shocks caused by the conflict and to monitor high-frequency price developments, wage trends, and inflation expectations more closely in the coming weeks and months [1]. While Breman noted that the RBNZ should not wait for second-round effects to appear in inflation, she indicated that the central bank will place greater emphasis on these indicators moving forward [1].
The upcoming meeting is expected to provide further insight into the RBNZ’s approach to navigating the current geopolitical risks. Although a rate hike at the next meeting in May cannot be ruled out, any such move would likely be driven by external factors, particularly developments related to the Gulf War, rather than domestic conditions [1]. According to Baur, any deviation from the expected decision to keep rates unchanged would be a significant surprise and would likely result in notable movement in the New Zealand dollar (Kiwi) [1].
CONCLUSION
The RBNZ is widely expected to maintain its current policy rate at the April meeting, with markets and analysts seeing almost no chance of a hike. The central bank’s future actions will be closely tied to global developments, especially the ongoing Gulf War, rather than domestic data. Any unexpected rate change would have a substantial impact on the Kiwi and market sentiment.