Key facts
- RBNZ held official cash rate at 2.75% in a 4-3 vote.
- Markets and five major NZ banks expected a rate hike.
- Annual inflation eased to 3.7% in the September quarter.
- RBNZ expects inflation to rise to 4.4% in December quarter due to fuel prices.
The Reserve Bank of New Zealand unexpectedly maintained its key interest rate at 2.75% on Wednesday, a decision that surprised markets and all five major local banks. The Monetary Policy Committee voted 4-3 to hold, with the majority citing subdued wage growth, stable inflation expectations, and a weak domestic recovery. Despite this, the RBNZ anticipates inflation will rise to 4.4% in the December quarter, largely due to fuel prices. A minority on the committee favored a 25 basis point hike to 3%, arguing that persistent core inflation risks entrenching price pressures. The central bank also flagged rising financial stability risks and warned of an abrupt global downturn.