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.
Reserve Bank of New Zealand Holds Official Cash Rate at 2.75%
The Reserve Bank of New Zealand’s Monetary Policy Committee voted 4-3 to hold the Official Cash Rate at 2.75%, citing lower-than-expected inflation and weak domestic demand. 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.