Geopolitical détente has directly rewritten the rate hike script, with a 4.0% peak 25bp lower than expected, and the market will have to reprice again.

Coin World News, Westpac Bank said it expects the Reserve Bank of New Zealand is unlikely to raise interest rates as sharply as initially expected. Because the early resolution of the Iran conflict means the inflation outlook will be weaker and the economic recovery will come earlier. Westpac expects the RBNZ to start raising rates in September, but will only raise rates once more for the rest of the year. This means the official cash rate will peak at 4.0% by the end of 2027, before falling back to a neutral level of 3.75% by the end of 2028. Previously, Westpac had expected the rate to reach as high as 4.25%. Westpac wrote: "Our core view indicates that the RBNZ will raise rates one fewer time this year than our most recent forecast, but one more time than the pre-conflict forecast."