Official cash rate stays on hold

The Reserve Bank of New Zealand’s monetary policy committee has kept the official cash rate (OCR) unchanged at 5.5 per cent for the seventh successive time.

It has stayed at that level for 12 months as the Reserve Bank attempts to push inflation into its target range of one to three per cent. Inflation stood at four per cent in the March quarter.

The central bank says the committee also discussed the “possibility of increasing the OCR” at a meeting on May 22 and adds interest rates may need to stay restrictive for longer than expected.

Revised forecasts from the Reserve Bank now have the OCR peaking at 5.65 in the fourth quarter this year, up from the 5.6 per cent predicted in its previous monetary policy statement released in February.

It is also tipping inflation to reach 2 per cent in mid-2026, six months later than previously expected.

The next OCR update is due on July 10.