A 4-3 vote holds the OCR at 2.75%, with hikes still likely
The Reserve Bank of New Zealand (RBNZ) has held the official cash rate (OCR) at 2.75% after its Monetary Policy Committee split 4–3, with three members pushing for a further increase. The decision, announced on 28 October, leaves mortgage advisers and borrowers facing an uncertain rate outlook.
Governor Anna Breman, Carl Hansen, Prasanna Gai, and Rebecca Williams voted to hold. Paul Conway, Hayley Gourley, and Karen Silk backed a 25-basis-point rise to 3%. Despite the split, the committee said “tighter monetary policy is likely to be required but remains conditional on the economic outlook”.
Why the committee split on the OCR
Members favouring a pause said the two most recent OCR increases give the committee time to assess their effects. They pointed to lower-than-expected inflation, subdued wage growth, and the risk of a weak recovery in household spending and investment.
The minority focused on core inflation, which has sat above levels consistent with headline inflation at the target mid-point for some time, and on the economy’s resilience. “Acting now would guard against sustained inflation pressures and potentially reduce the risk of needing to do more with interest rates later,” the record of meeting said, summarising their view.
What it means for mortgage borrowers
For advisers, the housing picture remains soft. “House prices continue to decline, weighing on household sentiment and spending,” the committee noted, although it saw early signs of recovery in residential investment, including in Auckland.
On lending, wholesale interest rates have climbed on expectations of a higher OCR and higher global long-term rates. Soft demand for credit and growing deposits have blunted that pass-through to lending rates, and some term rates for households and businesses have fallen.
Fuel to push inflation higher
Inflation is forecast to climb to 4.4% in the December quarter, largely reflecting current oil futures prices. That follows an easing in annual consumers price index (CPI) inflation to 3.7% in the September 2026 quarter, from 4.1% in June. Core inflation sits around the top of the 1–3% target band, and price rises have become more widespread.
Members noted that “information arriving over the next six weeks could meaningfully change the appropriate policy stance in either direction”. The committee’s next OCR decision, alongside a full Monetary Policy Statement, is due on 9 December.
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