OCR decision: RBNZ holds at 2.75% but says hikes are still likely

What happened. At 2:00 pm New Zealand time on 28 October (01:00 UTC) the RBNZ Monetary Policy Committee voted 4 to 3 to hold the OCR at 2.75%. Anna Breman, Carl Hansen, Prasanna Gai and Rebecca Williams voted to hold. Paul Conway, Hayley Gourley and Karen Silk voted for a 25-basis-point rise to 3%. Markets and economists expected the rise. The rate had already been raised in September.

Why pause. Inflation was 3.7% in the September quarter, down from 4.1% in June. That is lower than expected but above the 1 to 3% band. The four members who voted to hold said the two earlier increases give the committee time to judge their effect. Higher fuel prices passed through to other prices less than expected, and wage growth and inflation expectations fit a return to target. They also see a risk of a weak recovery.

Why three wanted to hike. Core inflation has been above the level that fits the 2% target for some time. They feared high prices could become a habit in how firms set prices while the conflict goes on and shipping costs rise.

What it signals for December. All seven members agreed that tighter policy is likely to be required, but it depends on the outlook. The committee weighed raising now against waiting for December. It wrote that data over the next six weeks could change the right stance in either direction, and that a sharp global downturn could even lead to easing. Governor Breman said that if domestic price pressure proves persistent, tightening could go into restrictive territory. The bank expects inflation of 4.4% in the December quarter, mostly because of current fuel futures prices.

What economists say. ANZ and ASB expect 25-basis-point hikes in December, February and March, taking the OCR to 3.5%. Capital Economics called the hikes "delayed, not cancelled". Kiwibank still expects 3%, sees 3.25% as possible next year, and thinks market bets on 4% are too high.

For borrowers. The RBNZ says wholesale rates in New Zealand rose on expectations of a higher OCR and higher global long-term rates. Yet some term lending rates for households and businesses fell: credit demand is weak and deposits are higher, so less of the wholesale rise reached customers. Kiwibank chief economist Jarrod Kerr said the hold should lower wholesale rates and ease pressure on mortgage rates. That is one economist's view.

The NZ dollar. The RBNZ says the NZD trade-weighted index, its value against a basket of trading partners' currencies, has fallen about 3% since the September statement. The bank says several factors are behind it. We did not find how the currency moved after the decision, so we do not say.

Keep in mind. Forecasts are not decisions. Much depends on fuel prices, global growth and new data. Breman said next week's general election had no bearing on the decision. This is not advice to buy or sell.

Confirmed facts

• On 28 October 2026 the RBNZ Monetary Policy Committee voted 4 to 3 to hold the OCR at 2.75%.^[1][3]
• Three members (Conway, Gourley, Silk) voted for a 25-basis-point rise to 3%; four (Breman, Hansen, Gai, Williams) voted to hold.^[1]
• Markets and economists expected a rise to 3%; the decision came at 2:00 pm New Zealand time.^[2][3]
• All committee members agreed tighter monetary policy is likely to be required, but it remains conditional on the outlook.^[1][2]
• Inflation was 3.7% in the September quarter, down from 4.1% in June and lower than expected; the target band is 1 to 3%.^[1]
• Inflation is expected to rise to 4.4% in the December quarter, largely reflecting current futures prices for fuel.^[1][3]
• The NZ dollar trade-weighted index has declined about 3% since the September statement.^[1][3]
• The committee wrote that information over the next six weeks could meaningfully change the appropriate stance in either direction; a sharp global downturn could lead to easing.^[1]
• The four who voted to hold wanted more time to assess the two earlier increases; actual inflation was lower than expected.^[1]
• The three who voted to hike pointed to core inflation above the right level and the risk of entrenched inflation.^[1]
• ANZ and ASB expect 25-basis-point hikes in December, February and March, to 3.5%.^[2][3]
• Capital Economics called the hikes "delayed, not cancelled".^[2]
• Kiwibank expects a rise to 3%, sees 3.25% as possible next year, and thinks market expectations of 4% are too high.^[3]
• Wholesale interest rates in New Zealand have risen, but some term lending rates for households and businesses have fallen.^[1]
• Kiwibank chief economist Jarrod Kerr said the hold should lower wholesale rates and ease pressure on mortgage rates.^[3]
• Breman said that if domestic price pressure persists, tightening could go into restrictive territory, and that the election had no bearing on the decision.^[3]
• House prices in New Zealand continue to decline and household consumption is weak.^[1]

Implications

• ConfirmedThe RBNZ paused hikes at this meeting but did not drop them.
• Our readingIf inflation and fuel prices stay high, a hike in December is likely.
• Our readingIf the global economy turns sharply down, the committee may delay hikes further or move to easing.
• Our readingWhile credit demand is weak, New Zealand mortgage rates may follow wholesale rates more than the OCR itself.

Still unknown

• How the NZD and the bond market moved after the decision: we did not check.
• The exact date and outcome of the December decision.
• How fuel prices and global demand behave over the next six weeks.

Who it affects

New Zealand, Global. People with a mortgage or loan in New Zealand, and anyone following the NZD and central bank rates

Sources

1. Reserve Bank of New Zealand: OCR held at 2.75% October 28, 2026 · official
2. NZ Herald: OCR decision: 'Delayed, not cancelled' - RBNZ signals rate hikes are still coming October 28, 2026 · media
3. Stuff: Live: Reserve Bank keeps OCR steady, defying expectations October 28, 2026 · media