The Reserve Bank of New Zealand raised its official cash rate by 25 basis points to 2.50% at its July meeting, in line with expectations, as policymakers sought to bring inflation back to the 2% target while avoiding unnecessary economic instability. The central bank noted that the partial reopening of the Strait of Hormuz has pushed global oil, gas and petrochemical prices lower, easing near-term inflation pressures, with headline inflation expected to fall from a peak of 3.9% in Q2 2026 to around 2% over the next 12 months. However, the Committee warned that the effects of the energy shock could persist, with medium-term inflation risks dependent on firms’ price-setting behaviour, margin rebuilding and the impact of a weaker exchange rate. The New Zealand economy lost momentum in the June quarter as higher energy costs weighed on activity, but growth is expected to resume in the September quarter as fuel prices decline and confidence improves.