Morning wrap (27.05.2026)

The RBNZ left the OCR rate unchanged at 2.25%, although the decision was reached only after a 3–3 split within the committee and a deciding vote from Governor Anna Breman.

All policymakers agreed that further rate hikes will likely be necessary — the disagreement concerned only the timing of when to begin. The updated OCR path was revised significantly higher, with the terminal rate projected at 3.28% by June 2029.

The New Zealand dollar is gaining between 0.5–0.7% against the other G10 currencies.

Governor Breman emphasized that the Middle East conflict was the direct reason for keeping rates unchanged at the current meeting. Even if the conflict ended immediately, inflationary effects are expected to persist for a longer period.

Shipping disruptions have lifted inflation not only through fuel prices, but also via broader transport costs and slower economic growth. This means that a geopolitical resolution alone will not eliminate the need for further monetary tightening.

Australia’s April CPI inflation slowed to 4.2% y/y, below market expectations, mainly due to a temporary fuel tax reduction. At the same time, trimmed mean core inflation rose to 3.4%, the highest level since late 2024.

BOJ Governor Kazuo Ueda and official comments suggest the possibility of a rate hike at the June 16 meeting. Ueda described the Middle East conflict as the “fifth oil shock” for Japan.

The US attacked Iranian boats accused of deploying mines near the Strait of Hormuz, triggering an Iranian response and further US strikes. Despite this, the Iranian negotiator remained in Qatar, signaling that diplomatic channels are still functioning.

OIL is falling toward 95 USD per barrel, while WTI is declining to 91.90 USD per barrel. Reports have emerged suggesting that an agreement may have already been reached.

The Trump administration appears to be giving Israel room to operate against Hezbollah in Lebanon. According to reports, Israel eliminated the new Qassam commander.

Goldman Sachs raised its S&P 500 year-end 2026 target to 8,000 points from the previous 7,600.