RBNZ HOLDS AT 2.75% AGAINST EXPECTATIONS OF A HIKE, NZD/USD FALLS 1.4%

The Reserve Bank of New Zealand kept its Official Cash Rate at 2.75%, defying expectations of a hike to 3.00% in a split 4–3 decision. NZD/USD fell 1.4% following the announcement. Although annual inflation eased to 3.7% in the September quarter, persistent core price pressures and a projected rise to 4.4% by December keep further monetary tightening in focus.

28 Oct 20261 min read

Daily Market Update October 28, 2026

RBNZ HOLDS AT 2.75% AGAINST EXPECTATIONS OF A HIKE, NZD/USD FALLS 1.4%

The Reserve Bank of New Zealand (RBNZ) kept its Official Cash Rate (OCR) unchanged at 2.75% on Wednesday, against expectations of a 25 basis point increase to 3.00%. The Monetary Policy Committee voted 4–3 to hold, with three members favouring a rate increase.

According to Investing.com, the NZD/USD pair fell 1.4% following the decision, while New Zealand’s benchmark NZX 50 index declined 0.5%. The decision came as policymakers weighed easing headline inflation against persistent underlying price pressures and an uneven economic recovery.

Annual consumer price inflation slowed to 3.7% in the September quarter, from 4.1% in June. However, core inflation measures have climbed towards the upper end of the 1%–3% target band, while price increases have become more widespread. The central bank projects annual inflation to reach 4.4% in the December quarter.

Despite holding rates, the RBNZ signalled that further monetary tightening is likely to be needed, with the timing dependent on how the economic outlook evolves. Members favouring an increase cited persistent core inflation and the risk of price pressures becoming embedded in wage- and price-setting behaviour.

Those supporting a hold argued that the previous two increases provided time to assess their effects, while subdued wage growth and stable medium-term inflation expectations supported a pause.

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