New Zealand's (NZ) inflation expectation rose on a 12-month time frame and was unchanged on a two-year time frame for the fourth quarter of 2025, the Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey showed on Tuesday.
Two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, steadied at 2.28% in Q4 2025 versus 2.28% seen in Q3.
NZ average one-year inflation expectations rose to 2.39% in Q4 vs. 2.37% in the third quarter.
NZD/USD reaction to inflation expectations
At press time, NZD/USD is closing in on 0.5636 following the data, down 0.16% on the day.
New Zealand Dollar Price Last 7 Days
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies last 7 days. New Zealand Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.32% | -0.21% | 0.05% | -0.16% | 0.14% | 1.26% | -0.37% | |
| EUR | 0.32% | 0.11% | 0.41% | 0.16% | 0.46% | 1.59% | -0.05% | |
| GBP | 0.21% | -0.11% | 0.30% | 0.06% | 0.35% | 1.48% | -0.16% | |
| JPY | -0.05% | -0.41% | -0.30% | -0.22% | 0.07% | 1.19% | -0.44% | |
| CAD | 0.16% | -0.16% | -0.06% | 0.22% | 0.29% | 1.42% | -0.21% | |
| AUD | -0.14% | -0.46% | -0.35% | -0.07% | -0.29% | 1.13% | -0.51% | |
| NZD | -1.26% | -1.59% | -1.48% | -1.19% | -1.42% | -1.13% | -1.62% | |
| CHF | 0.37% | 0.05% | 0.16% | 0.44% | 0.21% | 0.51% | 1.62% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
This section was published on Tuesday at 00.00 GMT as a preview of RBNZ Inflation Expectations survey.
RBNZ Inflation Expectations overview
Quarterly business managers’ survey results, collected and released by the Reserve Bank of New Zealand (RBNZ), give a rough aggregate overview of where New Zealand operators expect inflation rates to land within the next two years. The inflation expectations measure can sometimes be volatile and experience brief deviations from the actual trajectory of inflation, but it generally follows the real inflation rate over time.
RBNZ Business Inflation Expectations last clocked in a sharp bounce to 2.8% for the third quarter, and New Zealand Dollar (NZD) traders will be looking out for Q4’s release to see where NZ businesses expect inflation to be near the end of 2027.
How could RBNZ Inflation Expectations influence NZD/USD?
Inflation tends to be a self-fulfilling prophecy, and business operators may be prone to revealing their expectations for changes in the prices of their own products over the next two years through inflation expectations surveys. With the RBNZ at the mercy of inflation pressures on New Zealand’s natural rate of interests, a continued march higher in business-level inflation expectations may see the NZD find a fresh technical boost as Kiwi traders reposition themselves for fewer interest rate cuts in the future, or even interest rate hikes, than expected. On the flip side, declining inflation expectations could pave the way for an increase in the pace of RBNZ interest rate cuts, which could depreciate the NZD even further.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
