The Reserve Bank of New Zealand’s Monetary Policy Committee kept the Official Cash Rate (OCR) unchanged at 2.25 percent, judging that while annual consumer price inflation remained above target at 3.1 percent in the March quarter and is projected to peak at 4.3 percent in September before easing back to the 2 percent mid-point by mid-2027, weak domestic demand and elevated unemployment are tempering medium-term pressures. After a cumulative 100 bp of easing between August and November 2025, the OCR has been on hold since. Core inflation (around 2.3 percent), wage growth (2 percent) and medium- to long-term inflation expectations are still aligned with the target, but business and consumer confidence have fallen, GDP grew only 0.2 percent in 2025 Q4 and the output gap is estimated at –1.3 percent. Externally, oil-supply disruptions from the Middle East conflict are lifting energy costs, raising trading-partner inflation and weighing on global growth; the New Zealand dollar trade-weighted index is broadly steady despite earlier volatility. The Committee sees the balance of risks tilted toward higher inflation and weaker growth and therefore signals that the OCR will “most likely” need to rise sooner and by more than envisaged in February, with the scale and timing of tightening to depend on how wage- and price-setting dynamics evolve relative to demand softness.
Reserve Bank of New Zealand2026-05-27
Reserve Bank of New Zealand keeps Official Cash Rate unchanged at 2.25 percent
Reserve Bank of New Zealand’s Monetary Policy Committee kept the Official Cash Rate at 2.25 percent, noting 3.1 percent inflation projected to peak at 4.3 percent in September amid weak demand, falling confidence and a –1.3 percent output gap. It judged risks skewed to higher inflation and signalled the OCR will “most likely” need to rise sooner and by more than envisaged in February, depending on wage- and price-setting versus demand softness.