Reserve Bank of New Zealand Raises Cash Rate to 2.75%

The Reserve Bank of New Zealand raised the Official Cash Rate by 25 basis points to 2.75% on September 2, 2026. This marks the second consecutive increase following a similar hike in July, as policymakers attempt to curb headline inflation, which reached 4.1% in the second quarter. The bank attributed these inflationary pressures largely to rising fuel, airfares, and material costs linked to conflict in the Middle East.

The Monetary Policy Committee of the Reserve Bank of New Zealand indicated that further increases are likely, with at least one more 25 basis point rise expected by the end of the year to reach 3%. The bank's updated forecasts project the average rate could reach 3.07% by mid-2027 to return inflation to its 2% target mid-point. Despite a jobless rate reaching an 11-year high of 5.6%, the bank assessed that the national economic recovery is resuming and broadening, particularly in household spending and the export sector.

Finance Minister Nicola Willis welcomed the assessment, noting that the recovery is being driven by exports rather than house prices. In the private sector, ANZ and Westpac immediately raised their floating mortgage and certain savings rates by 0.25%. Meanwhile, the New Zealand Labour Party has proposed granting the central bank a dual mandate of price stability and maximum employment as the country prepares for a November election.