Chart of the Week: The anchoring of inflation expectations holds strong

Published on 17 November 2025

Our COTW takes a look at the RBNZ’s latest Survey of Inflation Expectations. It’s a bit of a nothing to see here report with expectations remaining comfortably anchored around 2%. But when headline inflation has risen as it has over the past year, the fact that expectations have held steady is worth a note. And it reflects the underlying weakness of the Kiwi economy.

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Sabrina Delgado

Economist

Inflation expectations_Dec25

Expectations of inflation tend to follow actual inflation. So, with Kiwi inflation recently hitting 3% -the top end of the RBNZ’s target band - there was a risk that inflation expectations could follow suit and head higher too. That would have been unhelpful, and certainly not what the RBNZ would have wanted to see. And thankfully, they didn’t have to. The RBNZ’s latest Survey of Inflation Expectations showed inflation expectations well anchored around 2%.

Expectations for where inflation would be in 2 years time were unchanged at 2.18%. Meanwhile, expectations of inflation in 5 years time dropped 4bps to 2.22%. There were some marginal moves higher in the 1 and 10 year ahead measure. However at 2.39% and 2.18% respectively, the slight moves remain of no concern. All measures of expectations remain soundly within the RBNZ target band and close to 2%.

It's a result the RBNZ would have taken comfort in. And it further supports the delivery of a 25bps cut next week.

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