New Zealand Inflation Eases, Opening Path for Big Rate Cuts
The inflation rate ran at an annual pace of 2.2% in the quarter compared with a rise of 3.3% in the second quarter
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SYDNEY—New Zealand’s inflation rate returned to within the central bank’s target band for the first time since early 2021 in the third quarter, opening a path to more supersized interest-rate cuts in coming months.
The inflation rate ran at an annual pace of 2.2% in the quarter, near the midpoint of the desired 1% to 3% target band, with some economists warning that the Reserve Bank of New Zealand must continue lowering the official cash rate at speed as a neutral policy rate is still well off in the distance.
The annual increase in inflation compares with a rise of 3.3% in the second quarter, StatsNZ said Wednesday. Inflation rose by 0.6% in quarterly terms.
The inflation data justifies the 75 basis points of cuts announced so far since August, with the RBNZ stepping up the pace of lowering the official cash rate last week by joining the Federal Reserve in slashing by 50 basis points.
Economists warn that there is a risk that inflation will undershoot the target band in coming quarters, especially if the RBNZ backs away from more significant cuts.
The official cash rate has so far fallen to 4.75% from 5.50%, with a neutral policy rate likely closer to 3.00%, according to economists.
New Zealand’s farm-rich economy has been in and out of recession for years as the RBNZ proved to be one of the more aggressive central banks globally when combating the inflation surge that emerged after the Covid-19 pandemic.
Economic activity remains flat and in need of resuscitation, especially with growth in China, its main trading partner, in a slowdown, economists said.
Higher rents were the biggest contributor to the annual inflation rate, up 4.5%. Almost a fifth of the annual increase in the consumer-price index was due to rent prices.
Prices for local authority rates and payments increased 12.2% in the 12 months to the third quarter, StatsNZ said. Prices for cigarettes and tobacco also rose sharply in line with an annual excise-tax increase.
Still, lower prices for gasoline and vegetables helped to offset rising prices, StatsNZ added.
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Gold miners are emerging as a compelling way to navigate market uncertainty, with analysts pointing to strong cash flows, attractive valuations and rising profit margins. As gold prices stabilize above US$4,000 an ounce, mining stocks could offer investors both downside protection and long-term upside.
3 min
Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.
The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.
Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.
Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.
Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.
These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.
Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.
Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.
Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.
“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.
“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.
Miners are better businesses than they used to be, the BCA team added.
“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.
That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.
“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.
They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.
An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.
What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.
One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.
But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.
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