Following the conclusion of its February monetary policy meeting on Wednesday, the Reserve Bank of New Zealand (RBNZ) decided to maintain the Official Cash Rate (OCR) at 2.25%.
The decision was in line with market expectations.
Summary of the RBNZ Monetary Policy Review (MPR)
- OCR suspended at 2.25%, with inflation expected to decline.
- Annual consumer price inflation at the end of 2025 remained slightly above the Monetary Policy Committee’s target range of 1-3 percent.
- Reserve Bank of New Zealand OCR unchanged at 2.25%.
- The Commission will continue to carefully evaluate incoming data.
- As the economic recovery deepens and inflation declines sustainably towards the target midpoint, monetary policy settings will gradually normalize.
- The economy is in the early stages of recovery.
- If the economy develops as expected, monetary policy will likely remain accommodative for some time.
- While residential and business investment is rising, households remain cautious in their spending.
- The risks to the inflation outlook are balanced.
- The labor market is stabilizing, but unemployment remains high.
- Inflation is likely to return to the commission’s target range of 1-3 percent in the current quarter.
Minutes of the RBNZ interest rate meeting
- The committee reached a consensus to maintain the OCR at 2.25 percent.
- Headline inflation is expected to decline near the midpoint of the target range.
- If the economy develops as expected, monetary policy will likely remain accommodative for some time.
- As the economic recovery deepens and inflation declines sustainably towards the target midpoint, monetary policy settings will gradually normalize.
- The Committee also considered the risk that policy would remain accommodative for too long.
- Members drew attention to the risk of persistent inflation.
- Significant spare capacity remains.
- One member supported maintaining the OCR at its current level, but noted that if economic activity recovers as expected, the withdrawal of monetary stimulus could begin a little earlier without harming the economic recovery.
- Another member noted that reacting too quickly to companies’ pricing intentions could reinforce perceptions of forceful demand and encourage companies to adjust on further price increases.
- Members agreed that the monetary policy stance would need to remain accommodative for some time.
NZD/USD reaction to the RBNZ interest rate decision
The New Zealand dollar is attracting some sellers in immediate reaction to the RBNZ interest rate decision. The NZD/USD pair is currently trading at 0.6026, down 0.34% on the day.
Today’s price of the New Zealand dollar
The table below shows the current percentage change of the New Zealand Dollar (NZD) against the major listed currencies. The New Zealand dollar was the weakest against the US dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.03% | 0.02% | 0.04% | 0.10% | 0.44% | 0.04% | |
| EUR | -0.05% | -0.02% | -0.04% | -0.01% | 0.05% | 0.39% | -0.02% | |
| GBP | -0.03% | 0.02% | -0.04% | 0.01% | 0.07% | 0.41% | 0.00% | |
| JPY | -0.02% | 0.04% | 0.04% | 0.04% | 0.09% | 0.43% | 0.03% | |
| BOOR | -0.04% | 0.00% | -0.01% | -0.04% | 0.05% | 0.39% | -0.01% | |
| AUD | -0.10% | -0.05% | -0.07% | -0.09% | -0.05% | 0.34% | -0.06% | |
| NZD | -0.44% | -0.39% | -0.41% | -0.43% | -0.39% | -0.34% | -0.40% | |
| CHF | -0.04% | 0.02% | -0.00% | -0.03% | 0.00% | 0.06% | 0.40% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select the New Zealand dollar from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- The following section was published on February 17 at 20:15 GMT as a preview of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
- The Reserve Bank of New Zealand will keep its key interest rate at 2.25% on Wednesday.
- All eyes will be on the RBNZ OCR forecast and the first press conference of the Bremen Governor.
- The New Zealand dollar may fluctuate following RBNZ policy announcements.
The Reserve Bank of New Zealand (RBNZ) remains on track to maintain its official cash rate (OCR) at 2.25% after its first monetary policy meeting of the year ends on Wednesday. The decision to keep the reference rate constant will be made after three consecutive cuts, signaling a break in the current cycle of monetary easing.
The decision is widely expected and will be announced at 01:00 GMT together with the Monetary Policy Statement (MPS), quarterly inflation projection and OCR. RBNZ Governor Dr Anna Breman, who will make her debut at her first Monetary Policy Committee meeting, will also hold her first press conference after the monetary policy meeting at 02:00 GMT.
The New Zealand dollar (NZD) could see a substantial reaction if the RBNZ surprises or offers clear guidance on the future path of interest rates.
What can you expect from the RBNZ’s interest rate decision?
The RBNZ, under the novel leadership of Governor Breman, is expected to finally halt its interest rate cut cycle this week.
The real question is whether the Kiwi central bank will signal the end of its monetary easing cycle amid rising inflation expectations, a stabilizing labor market and a gradual economic recovery. Therefore, the updated OCR forecast will be carefully analyzed.
During a press conference following the November policy meeting, then-Governor Christian Hawkesby noted that “the central projection is based on an interest rate unchanged until 2026”, adding that “we are currently seeing economic indicators rising across all high-frequency indicators”.
New Zealand’s two-year inflation expectations, seen as the time frame in which RBNZ policy actions will translate into prices, rose to 2.37% in the first quarter of 2026, compared to 2.28% recorded in the last quarter (Q4) of last year.
Meanwhile, the unemployment rate rose to 5.4% in the December 2025 quarter, the highest since the September 2015 quarter when it was 5.7%, Stats NZ data shows. However, New Zealand employment change in the fourth quarter was 0.5%, compared with 0% in the third quarter, beating the consensus forecast of 0.3%.
Strategists at BBH said: “The RBNZ is expected to present its OCR hike forecasts as New Zealand inflation runs high and the labor market improves. The swap curve implies increases of 50 basis points over the next twelve months, which supports the NZD.”
How will the RBNZ interest rate decision affect the New Zealand dollar?
The NZD/USD pair is in a bullish consolidation phase below the RBNZ six-month event risk high of 0.6094. Expectations of divergent monetary policy outlooks between the US Federal Reserve (Fed) and the RBNZ have so far favored Kiwis.
The further move north largely depends on whether the RBNZ moves towards hawkish guidance after the expected decision to suspend interest rates. NZD may also see novel buying interest following an upward revision to the OCR forecast, which could suggest upcoming interest rate increases.
On the contrary, if the central bank downplays the risk of inflation while refraining from giving any indication on the direction of interest rate changes, the kiwi dollar could experience a acute correction.
Dhwani Mehta, Chief Analyst for the Asia Session at FXStreet, provides a brief technical forecast for the NZD/USD pair and explains:
“Kiwi bulls appear to be gaining momentum ahead of another rally. The 14-day Relative Strength Index (RSI) is holding comfortably above the midline while the Golden Cross is in the making. The 50-day Simple Moving Average (SMA) is on the verge of crossing the 200-day SMA on a positive note.”
“The pair must permanently break the 0.6100 barrier to achieve a new upward trend. The next important bullish goals set the psychological level of 0.6150 and the round number 0.6200. On the other hand, strong support is visible at the 0.6000 threshold, below which the February 6 minimum at 0.5928 will be tested. A failure here opens the door to a deeper retreat towards the 50-day SMA and 200-day SMA convergence around 0.5875,” Dhwani added.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives include achieving and maintaining price stability – achieved when inflation as measured by the Consumer Price Index (CPI) is between 1% and 3% – and promoting as sustainable employment as possible.
The Monetary Policy Committee (MPC) of the Reserve Bank of New Zealand (RBNZ) decides on the appropriate level of the official cash rate (OCR) in accordance with its objectives. Once inflation exceeds the target, the bank will try to tame it by raising its key OCR, which will make it more pricey for households and businesses to borrow money and thus chilly the economy. Higher interest rates are generally positive for the New Zealand dollar (NZD) because they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is critical to the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest utilization of the labor force that can be maintained over time without causing an acceleration of inflation. “When employment reaches the maximum sustainable level, inflation will be low and stable. However, if employment remains above the maximum sustainable level for too long, it will ultimately cause prices to rise faster and faster, requiring the Monetary Policy Council to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) may introduce a monetary policy tool called quantitative easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions to raise the domestic money supply and stimulate economic activity. QE usually results in a weakening of the New Zealand dollar (NZD). QE is a last resort when lowering interest rates alone will not achieve the central bank’s goals. The RBNZ has used it during the Covid-19 pandemic.
