Central Bank holds rates in February

Latest bank decision: At its meeting on 18 February, the Central Bank decided to hold the Official Cash Rate (OCR) at 2.25%, following total rate cuts of 325 basis points from August 2024 to November 2025.

Elevated inflation motivates pause: The Bank decided to stay put to analyze the effect of previous monetary easing. The decision to not cut further was likely influenced by inflation overshooting the Bank’s 1.0–3.0% target range in Q4. In contrast, a rate hike wasn’t warranted given that inflation should return to target this year and the unemployment rate sits at an over-decade high.

Hike in store later this year: The Bank hinted that its next policy move was likely to be a hike. Most of our panelists expect the Bank to tighten its monetary stance before the end of this year, though several panelists still expect rates to stay on hold and one forecasts a cut.

Panelist insight: On the outlook, Goldman Sachs analysts said: “Looking ahead, given the amount of spare capacity in the NZ economy, we expect a strong economic recovery can proceed alongside benign inflationary pressures. We view [the] RBNZ communications as consistent with the first RBNZ rate hike being delayed to 4Q2026.” ANZ Bank analysts said: “We continue to forecast a December kick-off, but agree risks are not one-sided – the inflation starting point is stronger than expected, and data since November has generally been stronger than the RBNZ anticipated, but on the other hand, some recent data such as REINZ house sales and prices has suggested that the rapid turn in interest rates in recent months may have already caused a wobble.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects New Zealand interest rate projections for the next ten years from a panel of 18 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for New Zealand interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our New Zealand interest rate projections.

Want to get access to the full dataset of New Zealand interest rate forecasts? Send an email to info@focus-economics.com.