The Reserve Bank of New Zealand’s Monetary Policy Committee increased the Official Cash Rate by 25 basis points to 2.50 percent, saying that although lower oil and other petrochemical prices following the partial reopening of the Strait of Hormuz have eased near-term inflation pressures, annual consumer price inflation is still expected to remain above the 1 to 3 percent target range in coming quarters and medium-term inflation pressures remain uncertain as economic activity is expected to strengthen. The Committee said financial conditions have eased as wholesale rates declined and the trade-weighted New Zealand dollar depreciated, and it continued to view the current OCR as accommodative. Domestically, the recovery that was underway before the Middle East conflict lost momentum in the June quarter, but the Reserve Bank’s Kiwi-GDP nowcast points to 0.6 percent growth in the September quarter, with recent indicators showing weaker demand even as business confidence and some activity measures improved in June. Globally, the central bank said growth has remained resilient despite tariffs and conflict in the Middle East, supported by strong artificial-intelligence investment and spending on defence and economic security, while headline inflation in trading partners has risen but is expected to ease close to 2 percent in 2027. The Committee said some further reduction in monetary stimulus is likely to be required, with future OCR decisions dependent on incoming data, price-settin
Reserve Bank of New Zealand2026-07-08
Reserve Bank of New Zealand raises Official Cash Rate by 25 basis points to 2.50%
The Reserve Bank of New Zealand raised the Official Cash Rate (OCR) by 25 basis points to 2.50 percent, saying that while lower oil and petrochemical prices after the partial reopening of the Strait of Hormuz have eased near-term inflation pressures, annual consumer price inflation is still expected to remain above the 1 to 3 percent target range in coming quarters and medium-term inflation pressures remain uncertain. The Monetary Policy Committee said the current OCR remains accommodative and that some further reduction in monetary stimulus is likely, with future decisions to depend on incoming data, price-setting behaviour and the strength of economic activity.