RBNZ holds its cash rate at 2.75% in a 4-3 vote, says tightening is likely

Serguey Asael Shinder28 October 2026, 09:261 min read

The Reserve Bank of New Zealand's Monetary Policy Committee voted 4–3 on 28 October to keep the official cash rate at 2.75%, after raising it by 25 basis points to that level in September. The committee said tighter monetary policy is likely to be required, but that this remains conditional on the outlook.

Annual consumer price inflation was 3.7% in the September quarter, down from 4.1% in June and lower than expected. Wage growth has been subdued and medium-term inflation expectations stable. But core inflation measures have risen to around the top of the 1–3% target band, and price increases have become more broad-based. Fuel prices have risen further because of disruptions in global energy markets, and the exchange rate has fallen about 3% since early September; the bank expects annual inflation to rise to 4.4% in the December quarter, largely reflecting fuel futures prices.

On activity, the committee said the recovery continues but is uneven: export-exposed parts of the economy benefit from high commodity prices, strong goods demand and more tourists, while domestic demand outside exporting centres remains subdued. All members agreed on the inflation outlook; they differed on how much weight to put on the risks and on the timing of the response.

What it means

A 4–3 hold paired with "tighter policy is likely" is a pause, not a turn. The committee is choosing to wait through a fuel-driven rise in headline inflation while warning that the longer inflation stays high, the greater the risk it feeds into expectations and wage-setting. A close vote also means a small change in the data could tip the next decision.