RBNZ Holds OCR at 2.25% by Governor's Casting Vote After 3-3 Split

The Reserve Bank of New Zealand held its Official Cash Rate at 2.25 per cent on Wednesday, but only after the Monetary Policy Committee split 3-3 on whether to raise the rate by 25 basis points and the Governor exercised her casting vote to keep policy on hold.

In its May Monetary Policy Statement, the central bank said the OCR would most likely need to increase sooner and by more than envisaged in the February statement.

COMMITTEE SPLIT ON HIKE

The 3-3 split could only be resolved by the Governor's casting vote. Three members backed lifting the OCR by 25 basis points to 2.50 per cent, while three, including Governor Anna Breman, preferred to hold at 2.25 per cent. Under the Reserve Bank's decision-making framework, the Governor's casting vote broke the tie in favour of no change.

All members agreed that increasing the OCR at upcoming meetings would likely be necessary, according to the RBNZ.

The New Zealand dollar rose after the decision.

INFLATION SEEN PEAKING NEAR 4.3%

The May Monetary Policy Statement forecasts inflation to peak close to 4.3 per cent in the September quarter, materially above the top of the RBNZ's 1 to 3 per cent target band. The committee said rate increases would likely be needed to prevent higher inflation becoming embedded.

The bank's updated projections imply an OCR of about 2.84 per cent by the end of 2026.

The RBNZ's next OCR decision is due on 8 July 2026. For now, the Governor's casting vote has kept the OCR at 2.25 per cent.