New Zealand's central bank has surprised markets by holding its official cash rate at 2.75%, after a split 4-3 vote by its Monetary Policy Committee on Wednesday 28 October 2026. Three members preferred a rise to 3.00%, but the majority chose to wait and assess the effects of two earlier increases.

Markets had priced a hike as near-certain, with one report putting the probability at 95%, and 22 of 27 economists in a Reuters poll expecting a 25-basis-point rise. Governor Anna Breman was effectively the casting vote, preferring to watch how the July and September increases were working through the economy. The New Zealand dollar, already at 18-year lows against the US dollar, fell about 1% after the decision.

Inflation still above target

Annual consumer price inflation was 3.7% in the September quarter, down from 4.1% in June but still above the bank's 1% to 3% target range. The bank forecast inflation could rise to around 4.4% in the December quarter, largely because of high global fuel costs linked to the war in the Middle East.

More rises still likely

The bank stressed that tighter policy is still likely to be needed, depending on the outlook, and its next decision, alongside a full Monetary Policy Statement, is due on 9 December. Breman said the November election was not a factor in the decision, and that information arriving over the next six weeks could change the appropriate stance in either direction.