BNZMO

Research Markets Outlook 14 September 2026

Soaring oil prices again! • Inflationary pressures build further of a hike priced for the first meeting and around an even • RBNZ will be getting nervous chance of two rate hikes. We think this is entirely apt. • October QSBO of high importance When the Reserve Bank put together its September MPS it • Q2 GDP a positive growth surprise? assumed the Dubai Crude Oil price would average • Latest price data to confirm above target inflation USD83.70 across the September quarter falling to USD78.40 in a year’s time. As we write that crude price is We were surprised that the RBNZ was, in its September almost 17% higher than assumed for next quarter. Monetary Policy Statement (MPS), so aggressive in downplaying the possibility of the cash rate being hiked at Oil prices soar both of this year’s remaining monetary policy meetings on October 28 and December 9. But it was adamant that, barring data surprises this would be the case. Moreover, its interest rate track clearly indicated the December meeting would be the most likely to deliver the singular increase. We noted at the time that the key data due for release between now and the October meeting were unlikely to be sufficiently different to the Bank’s expectations for it to meet the hurdle required for an adjustment to its stance. We therefore decided there was no point in taking a different short-term view to the Bank when its near-term thoughts were so clearly laid out. We thus adjusted our rate call. In addition, the NZD TWI is currently sitting at 65.4 compared to a 66.9 estimate. This not only puts further But things can change very quickly in this zany world that upward pressure on domestic fuel prices but also on we now live in. The last few days have been a case in point imported inflation generally. with oil prices soaring, bond yields rising aggressively, central banks looking increasingly likely to push rates Currency Falls higher, the New Zealand dollar falling and, as a wee counterpoint to the unfortunate developments, New Zealand growth aggregates showing remarkable resilience. All the above were risks to our forecasts. None of the above were directly incorporated into our predictions. And, importantly, the very same can probably be said for the RBNZ. This leaves us with the dilemma of trying to decide how permanent the recent set of shocks will be. The longer they last the greater the chance the RBNZ will feel obligated to hike rates in October and the greater the risk that both October and December will come back into play. Financial markets have moved in line with this possibility. A few days back markets were pricing in little chance of a We’ve done some quick estimates of what this might mean rate hike in October and almost no chance of two before for our Consumers Price Index forecasts if oil prices stay the end of the year. Now, there’s a near two-thirds chance where they are for a few weeks and then fall in line with

Markets Outlook 14 September 2026

the current futures strip. Not surprisingly, the results are While all eyes on Thursday will be on the quarterly GDP discouraging. outturn, we strongly advise folk to look at the annual outturn, which we pick to be 2.4% as a better gauge of Of course, in terms of Q3 inflation the impact is minimal as what’s happening given the prospect of data revisions to the pump price of fuel will only be elevated for the last past quarters. Indeed, this time around there is the three weeks of the quarter and the starting point for fuel potential for these revisions to date back many years. prices was actually a bit lower than anticipated in the first place. So, when StatsNZ releases the Q3 CPI just six days Growth momentum intact before the RBNZ announces its October decision, annual % change Gross Domestic Product inflation is unlikely to be markedly different to its pick of 8 F 3.9%. Indeed, we think the number could be a little lower 6 Forecasts

than the Bank’s current projection. Annual average

4 The full impact of the elevated prices will, however, be a big shock to the Q4 reading which, by our reckoning will 2

now end up at 4.2% annual, some 0.3% above the Bank’s Annual 0 estimate.…