Elevated inflation at 4.1% year-over-year in the June 2026 quarter, driven by transport and energy costs amid Middle East supply disruptions, has anchored trader expectations for further tightening by the Reserve Bank of New Zealand ahead of its September 2 Monetary Policy Statement. The RBNZ hiked the official cash rate 25 basis points to 2.50% in July—the first increase in three years—while signaling additional hikes remain possible depending on incoming data, with inflation projected to peak near 4.3% before easing toward the 2% midpoint. This trajectory, reinforced by recent labor market and pricing surveys, underpins the 87.5% market-implied probability of an increase, as aggregated capital reflects the central bank’s focus on containing second-round effects despite spare capacity in the economy.