RBNZ Watch: RBNZ on pause in July, but easing has further to run

With activity having rebounded strongly in Q1 and headline inflation firming up, the RBNZ is likely to leave rates unchanged at 3.25% next week. However, we’re not convinced that the economy has turned the corner. And with the output gap set to remain deeply negative, underlying price pressures should continue to soften. Accordingly, we continue to forecast a terminal rate of 2.5% in Q1 2026.

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