Rising near-term inflation pressures from the Middle East energy shock, with headline CPI expected to peak near 4% in Q3 before easing toward the 2% target, underpin the 91% market-implied probability of a September OCR hike. The RBNZ’s July 25-basis-point increase to 2.50%—its first tightening in three years—signaled that policy remains accommodative relative to the inflation outlook, with the central bank explicitly noting further rate rises are possible depending on incoming data. Economic recovery is projected to resume in the September quarter as fuel prices moderate, potentially narrowing spare capacity and supporting tighter monetary conditions. A sharper decline in energy prices, weaker-than-expected domestic demand, or confirmation of persistent output gaps could still tilt the September Monetary Policy Statement toward no change.