The New Zealand dollar rose to around $0.582 on Thursday after briefly dipping to $0.578, as investors weighed weak economic growth against rising inflation risks. Data out today showed the economy expanded by just 0.2% in the December quarter, undershooting both analysts’ expectations and the Reserve Bank of New Zealand’s forecasts of 0.4% and 0.5%, respectively. Annual GDP rose 1.3%, missing the 1.7% estimate but coming in above the revised 1.1% growth in the previous quarter. Overall, the data points to a still-fragile recovery, with the Middle East war adding further uncertainty over the 2026 outlook. Last month, the central bank left its cash rate unchanged, with Governor Anna Breman indicating that a hike might only be considered in December as inflation was easing. However, the recent surge in energy prices is now expected to push inflation well above the RBNZ’s 1-3% target range for much of the year, prompting traders to price in rate increases in both September and December.