Reserve Bank of New Zealand increases interest rates by 25 bps at the October 2026 meeting?

Analysis

New Zealand's annual inflation came in at 3.7% for the September quarter, with consumer prices up 0.7% on the quarter, according to figures reported on 22 October. Economists polled by reports had expected 3.8% and 0.8%. That is a small miss, and it is still above the top of the central bank's 1% to 3% target range. The miss has not shifted the call. One economist forecast said it would not materially alter the Bank's thinking and that a 25 basis point hike was still expected. Westpac said core inflation pressures are elevated and that it now expects a 25bp hike next week. Other reports say many economists have pencilled in a move to 3% for the meeting on Wednesday 28 October. The Bank has itself leaned that way. Chief economist Paul Conway was reported as saying the path for rates is "Most likely up", while also calling the October decision "Wide open". That is the caution to weigh. A central banker keeping options open is not a commitment, and this is a lean toward a hike, not a certainty. Local economists also see fourth-quarter inflation possibly reaching 4.7%, against the Bank's projection of 3.9%. One forecast reportedly puts the chance of another quarter-point hike in December at one in two. That adds pressure to move now. What to watch is the Bank's statement on 28 October. If it describes the rate path in softer terms than "Most likely up", the case for a hike would weaken.