The Reserve Bank of New Zealand’s Monetary Policy Committee (RBNZ) decided to raise the official cash rate (OCR) by 25 basis points to 2.75% at its meeting this morning, Wednesday, September 2nd, as expected, with all six members agreeing. This marks the second consecutive rate hike since May 2023.

The statement issued by the bank indicated that inflation rose to 4.1% in the second quarter of the year due to higher fuel prices resulting from the conflict in the Middle East. Core inflation, expected wage growth, and inflation expectations remain consistent with inflation returning to the bank’s target range of 1-3% by mid-2027 and to the midpoint of 2% later next year.

The committee believes that the gradual unwinding of monetary stimulus is appropriate to bring inflation back to the midpoint target while supporting growth and employment. This reduces the risk of needing to raise the official cash rate later. Future monetary policy decisions will depend on the committee’s assessment of the balance of risks to inflation over the medium term.