The Reserve Bank of New Zealand (RBNZ) has raised the Official Cash Rate (OCR) by 25 basis points to 2.50%, which aligns with market expectations. The decision was made by consensus.

In its comments, the RBNZ did not provide clear forecasts for the future, preferring to base decisions on incoming economic data. This corresponds with analysts' views that flexibility is the best strategy under current uncertain conditions.

Despite a reduction in inflation risks, the Committee noted that they have not disappeared and that economic prospects have improved, so further rate hikes "appear likely" to return inflation to the target level of 2%. The timing of future increases remains uncertain and will depend on data regarding inflation, business pricing intentions, and economic activity.

Analysts still expect rate hikes at the next two meetings, bringing the rate up to 3%. They believe the economy no longer requires stimulus and that the rate hike is occurring amid an anticipated recovery rather than in response to a weak economy.

Key indicators for future decisions will include inflation data, business pricing intentions, and labor market conditions.

Markets reacted to the decision with a moderate rise in short-term interest rates and the New Zealand dollar, but this growth was short-lived. Geopolitical threats have moved to the forefront due to the sharp escalation of tensions between the U.S. and Iran. President Trump announced that the memorandum of understanding is "terminated," while Iran threatened that retaliatory strikes would occur at a ratio of at least two to one. Brent oil has approached $80 per barrel, and there is no doubt that if the U.S. carries out another strike tonight, as Trump promises, oil prices will rise further, and the threat of a global energy crisis will return to the agenda.

This evening, the minutes from the FOMC meeting, the first under Chairman Warsh, will be published. The market shifted focus to a hawkish stance following the FOMC meeting last month, interpreting a less aggressive signal from Warsh last week—suggesting that inflation expectations have decreased and that AI could boost productivity and lead to non-inflationary growth.

The net short position on NZD increased over the reporting week by $0.5 billion to -$3.62 billion, with speculative positioning remaining decisively bearish, despite market confidence in an RBNZ rate hike during the data collection. The estimated price is below the long-term average.

Predictably, the kiwi responded to the RBNZ rate hike with a rise, but it failed to break through the July high of 0.5722. The primary restraining factor is the resumption of strikes between the U.S. and Iran, as well as Trump's statement regarding the termination of the agreement. The situation directly depends on how events unfold; in the case of escalation and continued oil price growth, pressure on NZD/USD will increase, and we should expect a retest of the low at 0.5621 and a move toward 0.5575. There are evidently fewer grounds for continued growth.