New Zealand Keeps Official Cash Rate Unchanged at 2.25 Percent
The Reserve Bank of New Zealand's (RBNZ) Monetary Policy Committee held the official cash rate (OCR) steady at 2.25 percent, citing an economy that is "at an early stage in its recovery."
Consumer price inflation edged above the bank's 1 to 3 percent target band through the end of 2025, pressured primarily by rising food prices, electricity costs, and local council charges. Despite the overshoot, the committee projected inflation would retreat to the 2 percent midpoint within the next 12 months, underpinned by modest wage growth and slack remaining in the broader economy.
The RBNZ noted that earlier OCR reductions are beginning to filter through, with economic growth spreading into manufacturing, construction, and parts of the retail sector. Activity across agriculture and regional New Zealand has continued to hold firm, the committee added.
On the labor front, the committee acknowledged conditions are beginning to stabilize, though unemployment remains elevated. Meanwhile, subdued house price growth continues to weigh on household wealth and consumer spending appetite.
"Risks to the inflation outlook are balanced," the RBNZ said, cautioning that global uncertainty persists. The bank added that monetary policy is "likely to remain accommodative for some time," and indicated it would move to normalize settings only once inflation falls sustainably towards the target midpoint — pointing to a measured, data-dependent path ahead.
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