New Zealand Interest Rate

At its meeting on 2 September, the Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.75%, its second consecutive hike following July's increase and matching market expectations.

The Bank decision was aimed at taming inflation, which rose to 4.1% in the June quarter—well above the Bank’s 1–3.0% target band—due largely to higher energy costs. Moreover, the RBNZ anticipates that the economic recovery will “strengthen and broaden” going forward, providing the leeway to hike.

The Bank’s forward guidance was open-ended. This chimes with the views of our panelists; some see additional monetary tightening by end-2026, while some see rates on hold. The Bank will reconvene on 28 October.

Panelist insight: On the outlook, Nomura analysts said: “We think the RBNZ’s communication is consistent with our existing base case for a final 25bp rate hike in December (rather than October). This would appear to match the RBNZ’s stated desire to study the impact of the two rate hikes it has now delivered. This would also return the cash rate to a roughly neutral 3.0%. Underlying inflation appears contained, and there is material spare capacity in the New Zealand economy, so we continue to view a move into restrictive settings as not necessary.” In contrast, EIU analysts see rates on hold: “We consider this level [2.75%] to be broadly neutral and believe that the RBNZ will leave its policy rate here indefinitely.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects New Zealand interest rate projections for the next ten years from a panel of 18 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for New Zealand interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our New Zealand interest rate projections.

Want to get access to the full dataset of New Zealand interest rate forecasts? Send an email to info@focus-economics.com.