New Zealand Inflation Expectations Stay Low in Fourth Quarter

Post by : Sameer Saifi

New Zealand’s inflation expectations stayed low in the fourth quarter of 2025, according to a new survey released by the Reserve Bank of New Zealand (RBNZ). The survey showed that most people and businesses believe that inflation will remain under control in the coming years.

Inflation expectations for the next two years stayed at 2.28%, the same level as in the previous quarter. This number is important because it shows how people think prices will change in the near future. When inflation expectations stay steady, it means people are not worried that prices will rise too quickly.

The survey also found that many respondents expect the RBNZ to cut the official cash rate when the bank meets at the end of this month. The cash rate is the main tool the central bank uses to control borrowing costs in the economy. When the cash rate is lower, loans become cheaper, which can help businesses and families spend more.

New Zealand has been dealing with high inflation in recent years, as global prices for food, fuel, and housing increased. The RBNZ raised interest rates several times to slow down rising prices. Now, with inflation showing signs of easing, there is more hope that the economy is stabilising.

Keeping inflation expectations stable is important because it helps businesses plan for costs, helps workers understand real wage value, and supports economic confidence. If expectations rise sharply, it could lead to higher prices, because companies may raise costs early and workers may demand higher wages.

The steady expectation of 2.28% suggests that the central bank’s previous actions to control inflation are working. However, the situation still needs careful monitoring. The global economy remains uncertain, and changes in energy prices or supply chains could affect price levels again.

Economists will be watching the RBNZ meeting closely. If the bank cuts rates, it may help support growth. But if inflation rises again, the bank may need to keep rates steady for longer.

For now, the survey shows calm and controlled expectations. This is a positive sign for New Zealand’s economy as it continues to recover and aim for stable long-term growth.

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