All five major bank economists broadly agree the Reserve Bank will keep the OCR on hold at 2.25 percent on Wednesday, despite inflation sitting above the 1-3 percent target band at 3.1 percent. The timing of future hikes remains the central question.
The Reserve Bank of New Zealand is expected to keep the Official Cash Rate unchanged at 2.25 percent when it meets on Wednesday, May 27. That is the consensus view from ANZ, ASB, BNZ, Westpac, and Kiwibank economists, who broadly agree that while the inflation picture has shifted, the RBNZ wants more clarity before committing to a hike.
The OCR has been at 2.25 percent since the RBNZ cut it from 2.5 percent last November. The May review comes the day before the Government's election year Budget, which adds a layer of political context to what is already a technically complex decision.
Where inflation stands
Annual inflation came in at 3.1 percent in the March quarter — slightly above the RBNZ's own projections and the second consecutive quarter above the 1-3 percent target band. The Bank's April Monetary Policy Statement forecast that inflation would reach 4.2 percent in the June quarter, which would represent a significant deterioration from current levels if it materialises.
Services inflation, in particular, has been stickier than the RBNZ expected when it was cutting rates in late 2025. The combination of a tight labour market, elevated cost pressures in the services sector, and the lingering effects of earlier domestic inflation has made the inflation outlook less predictable than the Bank had assumed.
What the economists are watching
BNZ head of research Stephen Toplis put it bluntly: whichever direction the RBNZ moves, it will face criticism. Raise too quickly and it risks crushing economic activity. Move too late and it gets blamed for letting inflation become entrenched. "Who'd want to be a Monetary Policy Committee member?" he asked in his preview note.
Westpac chief economist Kelly Eckhold said the case for a hike at the May meeting is strong given how much the inflation outlook has changed since the second half of 2025, but he expects the Bank to hold anyway, choosing to wait for more data. He expects a live debate at the committee with the decision potentially going to a vote.
All five bank economists agree on one thing: the RBNZ is unlikely to be certain about the direction and pace of inflation until it sees more data. The global environment — tariffs, trade disruption, uncertainty about the US Federal Reserve's path — adds further complexity because it affects New Zealand's exchange rate, export earnings, and import costs simultaneously.
What this means for borrowers
A hold decision does not mean rates are going sideways. The market is pricing in three OCR hikes of 25 basis points each starting from the July meeting, meaning the OCR would reach 3.0 percent by the end of the year. Mortgage rates, which have already risen significantly in recent months, would likely face further upward pressure if that pricing proves correct.
For homeowners with floating or short-term fixed mortgages, the RBNZ's decision is a signal about the direction of travel rather than an immediate change to their repayments. For those refixing in the next six to twelve months, the trajectory matters more than any individual meeting.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.