RBNZ 3-3 Split Holds OCR at 2.25%; BoJ Signals June Hike, Core CPI Stays Sticky

A knife-edge RBNZ decision, a firmer Australian core inflation print, and coordinated hawkish signals from the Bank of Japan set the tone across Asia-Pacific FX this session. Each central bank event transmitted a distinct signal through rate expectations, currency valuations, and risk appetite.

RBNZ 3-3 Split and a Higher OCR Track

The RBNZ's Monetary Policy Statement delivered a hold by the narrowest possible margin. Governor Anna Breman's casting vote resolved a 3-3 split in favour of keeping the OCR at 2.25%. The hawkish message embedded in the updated projections and unanimous agreement on the need for hikes this year left the New Zealand dollar higher. The OCR track was revised sharply upward, with a terminal rate of 3.28% now projected for June 2029 and inflation forecast to peak at 4.3% in the September quarter. The market repriced the NZD higher against the dollar and the yen as the implied RBNZ tightening cycle moved ahead of both the RBA and the Fed. The revised path suggests the RBNZ is prepared to hike even if the economy softens, a contrast with the RBA's more cautious stance. For traders tracking the RBNZ Holds Rate, Warns Energy Shock Forces Earlier Hikes chain, the key transmission is through NZD crosses and short-end rates.

Australian CPI: Headline 4.2%, Core at 22-Month High

Australia's April CPI printed below consensus at 4.2% annually. The headline softness owed almost entirely to the temporary fuel excise reduction. The trimmed mean measure of core inflation ticked up to 3.4% annually, a 22-month high, keeping the RBA's June decision genuinely open. The AUD fell on the data. The market read the headline miss as a reason to reduce hawkish RBA bets. The core figure instead complicates that view. If the June CPI confirms the stickiness, the RBA may be forced to join the RBNZ's hawkish pivot. The AUD Slips as April CPI Miss Resets RBA Tightening Odds link captures the immediate pair reaction. The better read is that the core print keeps the RBA on a tightening path, limiting AUD downside.

BoJ Coordinates Signals Toward a June Hike

Governor Ueda's IMES Conference remarks and subsequent parliamentary testimony from BoJ Monetary Affairs Director-General Akio Okuno together pointed toward a June 16 rate increase. Ueda framed the current Middle East conflict as Japan's fifth oil shock and argued that initial conditions, including shifting inflation expectations and a tighter labour market, make this episode more consequential. Okuno confirmed financial conditions remain loose and real rates negative. The Nikkei rose 1.3% to a fresh record above 66,000. The BoJ's signals did not immediately boost the yen. The market is waiting for the actual hike and any guidance on the pace. The BoJ Official: Easy Financial Conditions Keep Yen Under Pressure article underscores the persistent drag on the currency. A hike on June 16 would begin to remove that drag, particularly if accompanied by a reduction in bond purchases.

Oil Drifts Lower on Hormuz Optimism

Oil drifted lower as hopes for a US-Iran agreement remained intact despite recent US self-defence strikes in southern Iran. An Al Jazeera chief tweeted that a deal had been agreed but not yet signed, though no official confirmation followed. Lower oil prices remove one source of upside inflation risk for Asian importers. The Hormuz channel risk remains. For currency traders, the oil slide provides a modest tailwind for the yen and the Indian rupee, both sensitive to crude import costs.

The next decision point is the RBA's June meeting. If the Australian core CPI persists above 3% and labour data stays tight, the RBA may need to follow the RBNZ's hawkish pivot. For the BoJ, the June 16 meeting will test whether the verbal signals translate into action. The NZD will likely stay supported as long as the OCR track continues to be revised higher. The forex market analysis page tracks these cross-currents across major pairs.