CA ANZ: OCR Decision Commentary & Outlook

Chartered Accountants ANZ Chief Economist Richard Holden:

Today’s decision to keep the OCR on hold at 2.25% after a previous 25 basis point rate cut reflects the likelihood that economic activity is picking up without being overly inflationary. GDP growth bounced back strongly in the September 2025 quarter, growing at 1.1%. Over the course of 2025 the CPI rose from 2.2% to 3.1%. That said, core inflation excluding food and energy stood at 2.5%, within the RBNZ’s 1-3% target band.

The decision to hold maintains optionality for the RBNZ while they await further economic data. If the economy keeps growing strongly and inflation rises further, we can expect a rate rise later in 2026.

By comparison, the Reserve Bank of Australia raised rates by 25bp at their February meeting, bringing it to 3.85%. That decision reflected a pickup in Australian underlying inflation to 3.3%, above the RBA’s 2-3% target band. GDP growth in Australia stood at 2.1% and there is a view that Australia’s productivity problems put the speed limit of the Australian economy at around 2%, otherwise inflation shoots up.

The RBNZ could plausibly engineer a scenario with a GDP growth rate of around 3%, keep inflation within the target band, and keep interest rates at 2.75%-3.0% by the end of 2026

With the RBA in a tightening cycle and the RBNZ holding for now, the New Zealand dollar may depreciate mildly against the Aussie.

© Scoop Media