NZ business confidence rises to +53 as pricing intentions hit highest since May
At a Glance
The New Zealand economy is showing resilience amidst rising inflation expectations, as signaled by the latest ANZ Business Outlook survey. With business confidence rising to +53 and a significant 52% of firms planning to raise prices—the highest since May—the Reserve Bank of New Zealand (RBNZ) has little incentive to pivot from its current tightening trajectory. Per the full note , the link between business sentiment and crude prices remains crucial, particularly with ongoing geopolitical tensions in the Middle East that could trigger volatility in oil markets, impacting the NZD's strength and overall economic outlook.
Key Takeaways
- 01NZ business confidence rises to +53 amid strong pricing intentions
- 0252% of firms plan to raise prices, highest since May
- 03RBNZ remains unlikely to ease tightening stance in the near term
Full Analysis
What the desk is arguing
The latest ANZ Business Outlook survey indicates that New Zealand's business confidence is recovering, with the headline figure at +53, despite heightened inflation pressures at a stable 3.3%. This upward trend supports a sustained hawkish stance by the RBNZ as they monitor pricing intentions that are increasingly robust. Per the full note , the anticipated average price increases have reached 1.9%, while significant growth in services export intentions ties into the currency's performance.
The data reflects a growing resilience in the New Zealand economy, demonstrated by a notable improvement in past activity readings to +15, with all sectors contributing positively. The RBNZ's view is further reinforced as cost expectations remain elevated at 82%, suggesting that businesses are prepared for continued inflationary pressures. This sentiment translates into modest support for the New Zealand dollar going forward.
Notably, the desk sees this as an opportunity for NZD strength against adverse oil shocks, especially given that the last oil crisis had a far less pronounced impact on business sentiment than anticipated. The alternative read—that the current price environment could crush demand—seems less applicable as the data suggests a robust economic backdrop that could absorb short-term shocks.
Where it sits in our coverage
Our current consensus target for the NZD stands at 1.075, with ranges suggesting a possible high of 1.12 from some firms and a low of 1.04. Specific targets from other firms include the following:
This reflects a slightly bullish stance on the New Zealand dollar overall, aligning with the positive dynamics observed in the ANZ report. jpmorgan is notably aligned with our bullish positioning, while bofa holds a contrary view at the lower end of the spectrum.
How other firms see it
Firms such as jpmorgan and citi appear optimistic regarding the NZD, supporting the narrative of resilience in the face of oil price fluctuations. Meanwhile, bofa offers a contrasting perspective, warning of potential downturns should inflation rise unchecked.
Traders should also keep an eye on inflation-linked instruments and proxy pairs like AUD/NZD, which may reflect shifts in both regional sentiment and RBNZ policy outlooks indirectly as inflation data develops.
Market Implications
With the NZD showing resilience against potential oil price shocks, traders should monitor cross-currency movements, particularly NZD/AUD, for potential breakout opportunities. The RBNZ's policy direction remains pivotal, with inflation expectations shaping trader sentiment as the market anticipates their next moves.
From the original
Firmer pricing intentions and inflation expectations stuck around 3.3% give the RBNZ little reason to ease off its tightening. The resilient activity readings also undercut any argument that the oil shock is crushing demand. For the New Zealand dollar, that is a modest support, t
Related speeches
4 itemsRBNZ to hike next week as inflation risks mount
The desk anticipates a 25 basis point rate hike from the Reserve Bank of New Zealand (RBNZ) on October 28, responding to increased inflationary pressures highlighted in recent economic data. Per the full note from ING, rising oil prices and a depreciating Kiwi dollar have altered the inflation landscape from the dovish tone previously adopted by the central bank. The RBNZ's earlier projections underestimated sustained inflationary pressures, which are now expected to push the inflation rate above 4.0% in the fourth quarter of 2026. This call matches market expectations and positions us for a hawkish RBNZ statement following the hike, paving the way for additional tightening in early 2027.
RBNZ preview: A 25bp hike, with some dovish risks
The Reserve Bank of New Zealand (RBNZ) is expected to raise its overnight cash rate by 25bps to 2.75% on September 2, 2026, a move that aligns with prevailing forecasts. However, as highlighted in the note from ING, the market anticipates a more aggressive tightening path than the RBNZ's own projections, indicating potential dovish risks that may impact the NZD. Recent inflation data, which showed a consumer price index (CPI) uptick to 4.1%, below the RBNZ's expectations, further complicates the landscape. This backdrop suggests that while a hike is widely expected, the central bank's commitment to continued tightening may face challenges ahead, particularly as markets have already priced in a tighter monetary policy by 2027 [source].
More like this
5 itemsFed's Daly: Jobs report is good news
BOJ's Ueda: Consumer prices now around 3% and expected to rise further into early next year
BoE's Pill: No repeat of 2022 hiking cycle as growth risks could keep rates on hold
Fed's Williams says US economy remains resilient, appropriate time to gather more information