Fresh cut for cash rate

The Reserve Bank of New Zealand has cut the official cash rate (OCR) by 25 basis points to 2.25 per cent.

The bank’s monetary policy committee voted for the change on November 26 after noting annual consumers price index inflation increased to three per cent in the September quarter. 

“However, with spare capacity in the economy, inflation is expected to fall to around two per cent by mid-2026,” the bank says.

“Economic activity was weak over mid-2025 but is picking up. Lower interest rates are encouraging household spending and the labour market is stabilising. The exchange rate has fallen, supporting exporters’ incomes.”

It adds that global economic growth has benefited from strong AI-related investment but is expected to slow in 2026 as trade barriers weigh on activity.

The bank believes risks to the inflation outlook are balanced. “Greater caution on the part of households and businesses could slow the pace of New Zealand’s economic recovery,” it explains. “Alternatively, the recovery could be faster and stronger than expected if domestic demand proves more responsive to lower interest rates.”

It says any future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolve.

The next OCR announcement is scheduled for February 18, 2026.