RBNZ signals steady hand on monetary policy

The Reserve Bank of New Zealand (RBNZ) has reinforced its current wait-and-see approach to monetary policy, indicating the official cash rate (OCR) is likely to remain on hold at 2.25% for some time, provided economic conditions continue to evolve as expected.

RBNZ Governor Dr Anna Breman said the economic outlook had developed broadly in line with the Monetary Policy Committee’s (MPC) expectations since the last OCR decision in November. “We continue to see signs that growth is recovering after having stalled in the middle of this year,” she said.

Dr Breman said that while the labour market remained weak, it was expected to improve as demand in the economy strengthened. She also expressed confidence that inflation – which was 3.0% in the September 2025 quarter – would fall towards 2% by mid-2026.

OCR likely to stay put for now

Dr Breman said the forward track published in November still showed a slight probability of another rate cut in the near term. “However, if economic conditions evolve as expected, the OCR is likely to remain at its current level of 2.25% for some time,” she added.

The Governor reiterated that monetary policy was not on a preset course. “This is why the MPC meets seven times a year to assess the latest economic conditions and forecasts,” she said.

What a holding pattern means for borrowers

After nine OCR cuts in the past ten meetings, a period of stability is not unusual. Holding the OCR steady would allow the RBNZ to observe how earlier cuts had fed through to borrowing costs, household spending and inflation over time.

For borrowers, a steady OCR does not necessarily mean mortgage rates will stay unchanged. Banks still respond to wholesale funding costs, competition and risk settings. However, the absence of further OCR cuts in the near term may reduce expectations of rapid mortgage rate declines.

For buyers and homeowners, this environment reinforces the importance of reviewing loan structures, understanding refix timing and considering how much flexibility is appropriate in a more stable rate setting.

If you’re speaking with buyers or homeowners who want help understanding what the Reserve Bank’s current stance could mean for their finance options, we’d be grateful if you could refer them to us.