The Monetary Policy Committee of the Reserve Bank of New Zealand reached consensus to raise the Official Cash Rate (OCR) by 25 basis points to 2.75%, judging that gradually removing monetary stimulus would return inflation to target while supporting growth and employment and reduce the risk of larger increases later. The OCR was cut 50 basis points to 2.5% in October 2025 and 25 basis points to 2.25% in November, held through May 2026, then raised 25 basis points in July. Annual inflation rose to 4.1% in the June quarter on higher fuel prices linked to the Middle East conflict, but core inflation, expected wage growth and inflation expectations remained consistent with a return to the 1% to 3% target band by mid-2027 and the 2% midpoint later next year. Growth was lacklustre in the June quarter, but the uneven recovery most likely resumed, supported by resilient trading-partner demand and strong export prices, while elevated unemployment, job insecurity and flat house prices weighed on household spending and residential investment. Domestic financial conditions tightened as wholesale rates lifted mortgage and business lending rates, while the exchange rate appreciated slightly. Global energy and petrochemical prices have raised trading-partner inflation and disrupted supply chains, although external growth and commodity export prices remained resilient. The Committee said the OCR may need to rise further under its central outlook, but the path is not predetermined and will de
2026-09-02Reserve Bank of New Zealand
Reserve Bank of New Zealand Raises Official Cash Rate by 25 Basis Points to 2.75%
The Reserve Bank of New Zealand raised the Official Cash Rate by 25 basis points to 2.75%, citing the need to gradually withdraw monetary stimulus and return inflation to target. It said further increases may be needed, but the path will depend on risks to medium-term inflation.