Fortnightly Economic Update – 9 July 2026
The Reserve Bank began returning monetary policy towards more neutral settings, raising the Official Cash Rate by 25 basis points for the first time in three years. While inflation forecasts were revised lower, spare capacity and subdued demand continued to constrain firms’ ability to pass on higher costs.
Business and consumer sentiment improved as fuel prices eased, with stronger confidence across sectors and signs of gradual employment growth. Building consents also continued to trend higher, although subdued house prices, excess housing stock and higher financing costs pointed to only a cautious recovery in residential investment.
Globally, energy disruptions and strong technology investment were pulling growth in opposite directions. The IMF expected global growth to slow to 3.0% in 2026 before recovering to 3.4% in 2027, while renewed Middle East tensions remained a key downside risk.
Domestic businesses reported cautious optimism, with exporters benefiting from resilient international demand and construction activity showing signs of improvement. However, weak household spending, elevated energy costs and uncertainty continued to weigh on hiring and investment decisions.
Fortnightly Economic Update – 23 July 2026
Annual consumer price inflation rose to 4.1% in the June quarter, broadly in line with the Budget Update forecast, with higher petrol and fuel prices accounting for much of the increase. Core inflation remained below 3%, although renewed Middle East tensions increased the risk of further energy price pressures.
Business sentiment improved during the June quarter, with expectations for general economic conditions strengthening and domestic trading activity showing modest gains. However, heightened uncertainty continued to weigh on firms’ hiring and investment decisions, while exporters benefited from strong dairy production and resilient international demand.
The housing market remained subdued, with house prices broadly flat and sales falling in June as listings continued to rise. Regional differences persisted, with agriculture- and tourism-focused areas such as Canterbury and Otago performing more strongly than Auckland and Wellington.
Global oil prices rose above US$90 a barrel as Middle East tensions disrupted the recovery in supply, while tighter refined-product markets added to inflation risks. China’s growth also slowed, and weaker Australian growth could reduce demand for New Zealand exports.
© The Treasury - New Zealand