NZ Inflation Expectations Fall to 2-Year Low, Fueling Rate-Cut Bets

The Reserve Bank of New Zealand's (RBNZ) latest survey shows that households and businesses in New Zealand are becoming increasingly confident that inflation will ease, with two-year inflation expectations falling to 2.34% in Q3 2025.

This decline is down from 2.53% in the previous quarter and brings expectations closer to the RBNZ's target range of 1-3%. The drop in one-year-ahead inflation expectations was also significant, coming in at a value not specified in this article but lower than in the previous quarter.

The easing of inflation expectations is seen as a positive sign for the RBNZ's fight against inflation and strengthens the case for further interest rate cuts. This could provide relief to borrowers by lowering mortgage rates and reducing debt-servicing costs.

However, the RBNZ will remain cautious in its approach, taking into account the full impact of past tightening and global uncertainties on the economic outlook. The labour market remains a key concern, with the unemployment rate standing at a value not specified in this article as of Q3 2025.