- Decision
- Maintain
- Rate change
- 0 bps
- official cash rate
- 2.75%
The Reserve Bank of New Zealand’s Monetary Policy Committee voted 4-3 to hold the Official Cash Rate (OCR) at 2.75%, as lower-than-expected inflation and weak domestic demand supported taking more time to assess recent tightening. The pause followed a 25-basis-point cut to 2.25% in November 2025 and quarter-point increases in July and September 2026. Annual consumer price inflation eased to 3.7% in the September quarter but is projected to rise to 4.4% in the December quarter, largely reflecting fuel futures prices. Core inflation has risen to around the top of the 1-3% target band and price increases have broadened, although wage growth remains subdued and medium-term inflation expectations stable. The export-led recovery continues, but household spending remains weak, while subdued credit demand has limited the pass-through of higher wholesale interest rates to lending rates. The New Zealand dollar’s depreciation since early September is adding to near-term inflation pressures. Global growth remains resilient but increasingly fragile amid geopolitical tensions, elevated energy prices and financial stresses. All members judged further tightening likely but conditional on the outlook, with persistent domestic pricing pressures potentially warranting increases and a sharp global downturn potentially prompting easing.
Rate evolution
Over the period, the Reserve Bank of New Zealand lowered the Official Cash Rate (OCR) by a net 50 basis points from 3.25 percent to 2.75 percent, cutting through late 2025 after a July pause, holding in early 2026, then raising the rate in July and September 2026 before holding in October. Early easing reflected declining core inflation, spare capacity, weak demand, and the view that tariffs and global policy uncertainty would restrain growth and medium-term inflation, even as headline inflation neared the top of the 1 to 3 percent band on food and administered prices. As the recovery stalled, the Committee accelerated easing in October before a smaller November cut, while judging risks as broadly balanced between persistent near-term price pressures and weak activity.
After holding the OCR at 2.25 percent as Middle East supply disruptions lifted fuel and petrochemical costs, raised near-term inflation and weakened activity, the Committee increased it by 25 basis points to 2.50 percent on July 8, 2026, as activity was expected to strengthen and non-tradables inflation persisted, then by another 25 basis points to 2.75 percent on September 2 after inflation reached 4.1 percent in the June quarter, largely because of higher fuel and related prices.
On October 28, 2026, the Committee voted 4–3 to hold the OCR at 2.75 percent, with the majority favouring more time to assess the two recent increases as annual consumers price index inflation fell to a lower-than-expected 3.7 percent in the September quarter, wage growth remained subdued and medium-term inflation expectations stayed stable. Core inflation had nevertheless risen to around the top of the 1 to 3 percent target band and price increases had broadened, while the Committee judged that tighter monetary policy was likely to be required but remained conditional on the economic outlook.