NZ Reserve Bank Raises OCR 25 Basis Points Amid Ongoing Inflationary Pressures

The New Zealand Reserve Bank has raised its Official Cash Rate (OCR) by 25 basis points to 2.75%, citing higher inflation due to fuel price increases caused by the conflict in the Middle East.

Inflation rose to 4.1% in the June quarter, but core inflation and wage growth remain on track for a mid-2027 return to the target band of 1-3% and a 2% target midpoint in late 2028.

The central bank noted that economic recovery has resumed, driven by resilient demand from trading partners and strong export prices. However, household spending remains weak due to low income growth, job insecurity, and stagnant house prices in Auckland and Wellington.