RBNZ Raises OCR by 25 Basis Points to 2.75 Percent Amid Rising Inflation

The Reserve Bank of New Zealand (RBNZ) has increased the Official Cash Rate (OCR) by 25 basis points to 2.75 percent, in line with market expectations. The decision was made by the Monetary Policy Committee, which cited higher fuel prices due to the conflict in the Middle East as a key factor behind inflation rising to 4.1 percent in the June quarter.

The RBNZ expects inflation to return to its target range of 1-3 percent by mid-2027 and reach the midpoint of 2 percent by next year. However, members flagged material downside risks to economic activity, warning that the recovery may continue to be patchy.

RBNZ Governor Adrian Orr stated that the OCR is moving closer to neutral but remains accommodative, while also reiterating that policy is not on a preset course and that the timing of any rate rises remains highly uncertain.