NZ Monetary Policy Statement - November 2025

Annual consumers price inflation increased to 3 percent in the September quarter. However, with spare capacity in the economy, inflation is expected to fall to around 2 percent by mid-2026. Economic activity was weak over mid-2025 but is picking up. Lower interest rates are encouraging household spending, and the labour market is stabilising. The exchange rate has fallen, supporting exporters’ incomes. Global economic growth has benefited from strong AI-related investment but is expected to slow in 2026 as trade barriers weigh on activity. Risks to the inflation outlook are balanced. Greater caution on the part of households and businesses could slow the pace of New Zealand’s economic recovery. Alternatively, the recovery could be faster and stronger than expected if domestic demand proves more responsive to lower interest rates. The Committee voted to reduce the OCR by 25 basis points to 2.25 percent. Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolve. RBNZ: LOWER INTEREST RATES ARE ENCOURAGING HOUSEHOLD SPENDING, AND THE LABOUR MARKET IS STABILISING RBNZ SEES OFFICIAL CASH RATE AT 2.25% IN MARCH 2026 (PVS 2.55%) Looks like a hawkish cut RBNZ: Inflation likely to fall to near 2% by mid-2026, supported by spare economic capacity. RBNZ minutes show the committee voted 5-1 to cut the OCR by 25 bps to 2.25%. RBNZ: After a weak mid-2025, the economy is beginning to gain momentum.

The Consumer Price Index (CPI) rose 3.8% in the 12 months to October 2025, up from 3.6% in the 12 months to September 2025. The largest contributors to annual inflation were Housing (+5.9%), Food and non-alcoholic beverages (+3.2%), and Recreation and culture (+3.2%). In the month of October, the CPI was flat (0.0%) in original terms and rose 0.3% in ...

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