NZ Raises OCR by 25 Basis Points to 2.75%

New Zealand's Monetary Policy Committee (MPC) has raised the Official Cash Rate (OCR) by 25 basis points to 2.75%. This increase is aimed at sustainably returning inflation to the 2% target mid-point over the medium term.

The MPC cited higher fuel prices due to the conflict in the Middle East as a contributing factor to the increase in inflation, which rose to 4.1% in the June quarter. However, core inflation, expected wage growth, and inflation expectations remain consistent with inflation returning to the 1-3% target band by mid-2027.

The Committee expects New Zealand's economic recovery to strengthen and broaden, with export prices remaining resilient and household spending gradually increasing. Conditions in the labour market are also expected to improve as the recovery gathers pace.