**Rising near-term inflation pressures from elevated energy prices tied to the Middle East conflict have shifted RBNZ policy expectations toward tightening.** In its May 27 Monetary Policy Statement, the central bank held the OCR at 2.25% but explicitly stated that rates would likely need to rise sooner and by more than previously projected, with headline inflation now forecast to peak at 4.3% in Q3 2026 before returning to the 2% midpoint in mid-2027. A split vote underscored internal debate, with the governor’s casting vote securing the hold while core inflation, wage growth, and medium-term expectations remain contained. Market pricing reflects this hawkish tilt, with traders assigning the highest implied probability to an increase at the July 8 review amid limited intervening data releases, though weaker domestic demand and spare capacity continue to support a meaningful chance of no change.