28 October 2026
This was about as close as it gets. The Monetary Policy Committee voted 4–3 to hold. Governor Anna Breman and three other members backed a pause, arguing that the two increases already made this year, in July and September, give the Committee time to assess how those moves are flowing through the economy.
The three members who wanted a 25 basis point increase pointed to core inflation, which has been sitting above target-consistent levels for some time. Their concern is that the longer inflation stays high, the greater the risk it becomes embedded in how businesses set prices and wages.
Heading into today, economists and wholesale markets had all but locked in a hike. The NZIER Shadow Board’s majority had recommended one too, although several of its members favoured a pause, so the Reserve Bank has effectively sided with the minority view. The New Zealand dollar fell sharply on the news.
Importantly, this isn’t the end of the tightening cycle. The Committee agreed that higher rates are still likely to be needed, but that the timing will depend on how the economic outlook develops. Subdued household spending appears to be limiting how much businesses can pass on higher costs, which gave the majority some comfort to wait.
Because a hike had been priced in, wholesale rates may ease back slightly, which could take some short-term pressure off bank fixed rates. But with the Reserve Bank still signalling a tightening bias, the overall direction for rates over the next year remains upward rather than down.
For anyone with a fixed rate coming up for renewal, today’s decision buys a little breathing room, not a change in direction. Getting your timing and structure right still matters, whether that’s splitting across terms, fixing for longer, or keeping some flexibility.
Get in touch with the KPM team on 021 300 192 or info@krispedersen.co.nz.
This article is general information only and does not constitute personalised financial advice.