RBNZ keeps OCR unchanged at 2.25%

The Reserve Bank of New Zealand’s Monetary Policy Committee kept the Official Cash Rate (OCR) unchanged at 2.25 percent, judging that the Middle East conflict-driven spike in oil prices will lift near-term inflation while simultaneously damping New Zealand’s nascent economic recovery and leaving sizeable spare capacity. The decision follows a cumulative 75 bp easing between August and November 2025, after which the OCR was held steady in February. Since the conflict began, domestic wholesale rates have risen, fixed-term mortgage costs have edged up about 20 bp and the New Zealand dollar has depreciated on a trade-weighted basis, tightening overall financial conditions even without further policy moves. Consumer price inflation was 3.1 percent in 2025 Q4—above the 1–3 percent target band—and is now projected to reach 3.0 percent in 2026 Q1 and 4.2 percent in Q2, while December-quarter GDP grew just 0.2 percent and recent surveys point to softening business activity and consumer confidence. The weaker currency is adding some upside risk to prices, though it supports exporters, as higher global energy costs and disrupted supply chains cloud the external outlook. Globally, the conflict has lifted oil and refined-product prices, unsettled financial markets and prompted expectations of tighter monetary stances abroad. The Committee stressed it “stands ready to act”; should core inflation, wage growth or medium-term inflation expectations threaten the 2 percent midpoint, it will res