New Zealand Inflation Exceeds Target: RBNZ Faces Rate Hike Pressure

• New Zealand's Consumers Price Index (CPI) rose 3.1% in the December quarter, surpassing the RBNZ's 1-3% target band.
• This modest overshoot strengthens arguments that the RBNZ may halt easing and potentially consider rate hikes.
• The RBNZ cut its Official Cash Rate (OCR) to 2.25% in November, signaling an end to its rate-cut cycle.
• Markets anticipate a potential rate hike by September, despite most economists expecting the OCR to remain unchanged until 2027.
• Key contributors to inflation include higher meat prices, overseas accommodation costs, electricity prices, rents, and local government land taxes.

Why It Matters: New Zealand's inflation exceeding its target puts pressure on the RBNZ to reconsider its monetary policy stance.