RBNZ Survey: Kiwi Inflation Expectations Plummet, Interest Rate Hopes Rise
The Reserve Bank of New Zealand's Survey of Expectations released in August 2025 shows that inflation expectations have decreased. Consumers Price Index (CPI) inflation expectations for one year ahead dropped by 81 basis points from 3.41% to 2.60%. This is a significant decrease, indicating that people expect prices to rise more slowly over the next year.
However, looking further out, five-year-ahead inflation expectations increased by 9 basis points from 2.22% to 2.31%, while ten-year-ahead inflation expectations rose by just 1 basis point from 2.19% to 2.20%. This mixed picture suggests that people's views on long-term price growth are more varied.
When it comes to interest rates, the Survey shows that the mean expectation for the Official Cash Rate (OCR) at the end of September 2026 quarter is 2.73%. One-year-ahead OCR expectations increased by 20 basis points from 3.01% to 3.21%, indicating that people expect higher interest rates in the short term.