Chart of the Week: From “low and stable” to “high and uncertain”

Published on 23 March 2026

Covering the dramatic move in wholesale rates

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Jarrod Kerr

Chief Economist

We have witnessed another dramatic move in financial markets. Wholesale interest rates have surged higher, as thoughts of oil induced inflation dominate positioning. "Low and stable" inflation/rates have become "high and uncertain". And traders have pushed short dated yields over 70bps higher in just a few weeks.

Market Pricing RBNZ meetings 23mar

The escalation in the Iran war, without an end in sight, has markets fixated on not just the oil price, but delivery of refined products - diesel especially. It's diesel that is used in the big trucks and farming equipment. It seems markets are pricing in higher inflation, without consideration for demand destruction. Higher petrol prices hurt consumers and businesses. Short-dated rates have over 3 rate hikes priced in for this year. We find that hard to imagine, let alone forecast. The pivotal 2-year swap rate has been catapulted to 3.64%, and climbing, from a 2.9% low following the last RBNZ's statement in February. That's a massive move, that reminds us of the spike following the RBNZ's previous statement in November. These massive moves are being passed onto mortgage rates, effectively tightening financial conditions (again).

RBNZ OCR vs swap rate 23mar

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