Reserve Bank of New Zealand reiterates 2.25 percent OCR hold and signals earlier and larger increases in Hawke’s Bay speech

The Reserve Bank of New Zealand published remarks by Dr Breman from a Hawke’s Bay event that restated the Monetary Policy Committee’s May 2026 decision to hold the Official Cash Rate at 2.25 percent and indicated that the OCR is likely to increase sooner and by more than previously signalled. The speech linked the outlook to an uncertain global backdrop, with supply chain disruptions, higher input costs and the Middle East conflict expected to weaken growth while lifting near term inflation in New Zealand and its trading partners. Dr Breman said domestic conditions remain marked by subdued confidence and uneven sector performance, with parts of the primary sector still performing well while other sectors struggle. Business feedback and survey data point to weaker confidence and spending, rising costs squeezing margins, and pressure on investment and hiring decisions. Inflation remains uncertain because expectations of higher costs could keep it elevated, even as weaker demand and higher unemployment are expected to dampen pressures over time. During the Hawke’s Bay visit, meetings with local councils, Cyclone Gabrielle recovery agencies, iwi representatives, horticulture producers, industry bodies and rural advocacy groups were presented as input into the bank’s assessment of regional conditions and their effects on the wider economy and financial system stability.