NZ Interest Rates, Trade & Economy Update: Fonterra, Exports & More (Feb 15)

New Zealand’s economic landscape is marked by shifting trade dynamics, cautious monetary policy, and evolving pressures on businesses and consumers, according to reports released Friday, February 20, 2026.

Fonterra, the dairy giant, has lifted its current season payout forecast, buoyed by improved product returns. The company will also distribute Mainland earnings as a special dividend, in addition to returns from the Lactalis transaction. This news comes as January exports rose by 2.6%, though imports increased at a faster pace of 1.6%, resulting in a merchandise trade deficit of $519 million. While this deficit is smaller than the $549 million recorded in January 2025 and half the $1.064 billion from January 2024, New Zealand hasn’t seen a January trade surplus since 2016.

Export destinations showed varied performance. Exports to China were down 7%, while those to Australia increased by 20%. Trade with the US remained unchanged, while exports to the European Union and Japan saw gains of 16% and 11% respectively. On the import side, China saw a 24% increase, the EU a 5.6% rise, and South Korea a significant 36% jump. Imports from Australia fell 8.1% and from the US decreased by 17%.

Meanwhile, political pressure is mounting on Commerce and Consumer Affairs Minister Scott Simpson to abandon a proposed ban on credit card surcharges. Retailers are reportedly threatening to raise prices for all consumers if the ban proceeds, despite successful implementations in other countries including the EU, England, India, China, Vietnam, South Korea, and The Philippines. Minister Simpson acknowledged the feedback received during select committee hearings and indicated further consideration is underway.

In the financial sector, Westpac has cut home loan rates, with further updates expected. No changes were reported for term deposits or savings rates. Wholesale swap rates are described as “softish,” with the 90-day bank bill rate decreasing slightly to 2.49% on Thursday. Bond yields across various countries also experienced minor fluctuations.

The New Zealand job market shows signs of continued recovery, with the BNZ/Seek monthly review indicating an ongoing increase in job advertisements, though some skills mismatches are apparent. Manufacturing job ads are increasing, but at a slower pace than those in the services sector.

Auckland Transport data reveals that public transport ridership in 2025 reached 88.7 million trips, but has since plateaued since September 2024, remaining 14% lower than the pre-pandemic peak of 103.6 million trips in February 2020.

On the equity market, the NZX50 index is down 0.9% as of 3pm Friday. Market heavyweight Fisher & Paykel Healthcare experienced a slight decline, while Auckland International Airport, Investore, Tower, and Spark posted gains. EBOS, SkyCity casino, a2 Milk, and Mercury were among the biggest decliners.

Globally, the International Monetary Fund (IMF) has urged China to reduce industrial subsidies and accelerate its shift towards consumption-led growth, citing concerns about fueling global trade tensions. Japanese inflation has decreased to 1.5% in January, the lowest level since March 2022, driven by a slowdown in food price increases.

Oil prices continue to rise amid Middle East tensions, reaching just under US$67 per barrel for American oil and US$72 for Brent crude. Carbon prices remain stable, while gold has increased to over US$5006 per ounce. The New Zealand dollar has dipped against the US dollar, trading at just under 59.6 US cents, but strengthened against the Australian dollar, reaching 84.7 AU cents. Bitcoin’s price is currently at US$67,338, showing modest volatility.