The Reserve Bank of New Zealand’s Monetary Policy Committee on 28 October 2026 voted 4-3 to hold the official cash rate at 2.75%. The decision ran counter to market pricing and the consensus expectation of a 25 basis-point increase.
Annual consumers price index inflation stood at 3.7% in the September quarter, lower than the Bank had expected. The Committee noted that wage growth had remained subdued and that medium-term inflation expectations had stayed stable. At the same time, core inflation measures had risen to around the top of the 1–3% target band, and price increases were described as becoming more broad-based across the economy.
Global factors were identified as the main source of near-term pressure. Fuel prices had risen further on ongoing disruptions in energy markets, and the New Zealand dollar had fallen by around 3% since early September. On the basis of current futures prices for fuel, the Committee expects annual inflation to rise to 4.4% in the December quarter. It explicitly flagged that near-term inflation forecasts remain uncertain given the volatility in oil and refined fuel prices.
The Committee assessed that the economy continues to recover, although conditions remain uneven across regions and industries. Domestic demand outside exporting centres was characterised as subdued, while early signs of a recovery in residential investment, including in Auckland, were noted.
The governing framework remains unchanged: the Committee is focused on returning inflation to the 2% target mid-point over the medium term, discounting temporary disturbances and seeking to avoid unnecessary economic instability. All seven members agreed on the overall inflation outlook. They differed on the weight attached to near-term risks and on the appropriate timing of any further tightening.
The published record shows that Governor Anna Breman voted with the three members who preferred to hold the rate. The three dissenting members favoured an immediate 25 basis-point increase to 3.00%. The Committee’s collective statement concluded that tighter monetary policy is likely to be required but remains conditional on the economic outlook.
For institutional holders of New Zealand dollar assets or regional fixed-income exposure, the decision leaves the policy rate unchanged while keeping the possibility of further tightening explicitly open. The split vote and the upward revision to near-term inflation highlight that the path remains data-dependent rather than pre-committed.