The Reserve Bank of New Zealand raised the official cash rate by 25 basis points to 2.75% on 2 September 2026, its second consecutive increase, as it published its September Monetary Policy Statement. The Monetary Policy Committee, chaired by Anna Breman, reached the decision by consensus, with the aim of sustainably returning inflation to the 2% midpoint of its 1–3% target range.
The rate was 2.25% until July, when the committee lifted it to 2.50%. Annual consumer price inflation reached 4.1% in the June 2026 quarter. The Reserve Bank said the rise was largely driven by higher fuel and related prices resulting from the Middle East conflict. Excluding vehicle fuels, annual inflation was 2.9%.
INFLATION SEEN BACK IN THE BAND BY MID-2027
The committee said inflation is expected to remain elevated this year before returning to the target band by mid-2027 and to the 2% midpoint in late 2027. The committee said more persistence in energy and petrochemical prices could raise near-term inflation risks, affect price-setting behaviour and lead to stickier inflation.
Economic growth was lacklustre in the second quarter but is expected to have resumed in the third, while remaining uneven across sectors and regions. Resilient demand from trading partners and strong export prices are supporting activity, particularly in the South Island and some North Island regions, although the Reserve Bank said the positive spillovers from exports into the broader economy have so far been limited. Employment growth has not been sufficient to absorb new entrants to the labour force, and unemployment remains elevated.
FURTHER INCREASES POSSIBLE
The committee said the OCR may need to increase further, but that its future path is not pre-determined. The next OCR decision is due in October.
Sources: Reserve Bank of New Zealand, "OCR increased by 25 basis points to 2.75%", 2 September 2026; RBNZ, official cash rate decisions.