New Zealand Central Bank Surprises Markets With Rate Hold

By James Glynn

SYDNEY--The Reserve Bank of New Zealand held interest rates steady at a policy meeting on Wednesday, surprising money markets that had considered a further hike a near certainty.

The official cash rate was held at 2.75% after a split decision by the bank's policy-setting board, with the RBNZ adding that further hikes are still likely.

The monetary policy committee voted 4 to 3 to hold the cash rate steady.

The decision to hold interest rates is consistent with the RBNZ's public comments in recent months that a slow tightening of policy is likely to be the better course of action.

"The removal of monetary stimulus to date has supported forward-looking indicators of medium-term inflation remaining anchored," the central bank said in a statement.

Still, recent inflation data showing that underlying price pressures were building prompted most economists to forecast a hike.

While not mentioned by the RBNZ, the decision to hold rates steady may also have been affected by the fact that an election is will be held next month.

New Zealand's economy is showing signs of recovery, but unemployment is still around its highest level in 11 years and growth uneven.

The central bank said it remains focused on global risks that include elevated fuel prices and the unresolved war in the Middle East.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

October 27, 2026 21:39 ET (01:39 GMT)