The New Zealand dollar rose to around $0.587 on Wednesday after the Reserve Bank of New Zealand kept its official cash rate unchanged at 2.25% as expected but signaled that rate increases are likely in the coming months. The policy outlook leaned more hawkish, with the central bank’s forward guidance showing the OCR rising to around 2.84% by year-end, implying at least two 25-basis-point hikes. This reflects concerns that rising fuel costs could push inflation well above the RBNZ’s 1-3% target band, with inflation projected to accelerate to 4.3% in the third quarter, strengthening the case for tighter policy to prevent price pressures from becoming entrenched. However, the central bank also acknowledged growing economic headwinds, noting that higher energy prices are already weighing on household spending and dampening business confidence. The RBNZ lowered its GDP forecast, now projecting growth of 1.4% for the year ending March 2027, down from 2.4% in its February estimate.