The hawkish tone from the Reserve Bank of New Zealand’s May 27 Monetary Policy Review, which held the Official Cash Rate steady at 2.25 percent in a split vote, has driven the 85 percent market-implied probability of a rate increase at the July 8 meeting. Officials cited elevated petrochemical prices tied to Middle East developments, projecting headline inflation to peak near 4.3 percent in the September 2026 quarter and signaling that tightening could begin sooner and proceed more aggressively than the February outlook. Core inflation and wage growth remain contained, yet the committee flagged second-round effects, with two-year swap rates rising post-statement and limited economic data releases expected before July. This positions an initial 25-basis-point hike as the dominant trader consensus amid ongoing uncertainty around energy prices.