[PREVIEW] RBNZ Rate Decision Scheduled for Wednesday 28th October 2026 at 01:00GMT/21:00EDT

• RBNZ is expected to hike the OCR by 25bps to 3.00% on Wednesday.
• RBNZ delivered back-to-back hikes in July and September.
• Above-target inflation and rising oil prices support the case for further hikes.

OVERVIEW: The RBNZ is expected to continue with its rate hike cycle at its meeting on Wednesday, with money markets pricing around a 93% likelihood that the central bank raises the Official Cash Rate by 25bps to 3.0% following back-to-back hikes at the previous two meetings in July and September.

RBNZ DELIVERED A SECOND CONSECUTIVE RATE HIKE IN SEPTEMBER: The central bank hiked the OCR by 25bps to 2.75% at the last meeting in September for its second consecutive hike, which was as expected and with the decision reached by consensus, while the Committee judged that gradually removing monetary stimulus is appropriate to return inflation to the 2% target midpoint while supporting growth and employment. It also stated that the decision reduces the risk that the OCR needs to increase by more later and that policy decisions will depend on the Committee’s judgement of the balance of risks to medium-term inflation, as well as noted that the future OCR path is not pre-determined and that indicators of medium-term inflation are consistent with inflation returning to target. In addition, the latest projections were relatively in line with the previous forecasts, as it sees the Official Cash Rate at 2.81% in December 2026 (prev. 2.84%), 3.12% in September 2027 (prev. 3.11%), 3.15% in December 2027 (prev. 3.15%), and at 3.28% in September 2029. RBNZ Governor Breman said during the post-meeting press conference that they are moving the OCR up towards neutral and that it is still accommodative, while she also stated that they may need to take some time to assess the stance of policy and are not on a preset course, with the rate hike timing highly uncertain. Furthermore, she said there will likely be a further OCR increase, and they will assess the impact of hikes already done. Overall, this would suggest the central bank is leaning towards further rate increases, but with uncertainty regarding the timing.  

OIL PRICES, RHETORIC AND DATA SUPPORT THE PROSPECTS FOR AN IMMINENT HIKE: The more recent language from the central bank has been slightly more hawkish as RBNZ Governor Breman stated that near-term inflation is expected to be somewhat higher if elevated oil prices persist and she remains focused on the inflation outlook ahead of the October policy decision, while she noted that the economic outlook remains subject to significant risks and stated that current data points to continued economic recovery, though progress remains uneven. RBNZ Chief Economist Conway also commented that New Zealand is feeling the effects of the oil price shock, while he affirmed the direction of the OCR is most likely up and stated the next OCR decision is wide open. Furthermore, the data suggests there is scope for further rate increases as New Zealand GDP for Q2 topped forecasts with Y/Y growth at 2.6% vs. Exp. 2.3% (Prev. 1.7%), while CPI Y/Y for Q3 slowed and printed softer-than-expected at 3.7% vs Exp. 3.8% (Prev. 4.1%), but remained comfortably above the central bank’s 1-3% medium-term target.  

ANNOUNCEMENT: The announcement is due on Wednesday at 01:00GMT/21:00EDT, with initial attention to be on the decision on rates and the language for any clues regarding future policy, while RBNZ Governor Breman will also be conducting a post-meeting press conference which will begin an hour after the initial announcement.

A third consecutive hike priced at better than nine-in-ten puts the decision itself in the low-information category: the repricing risk sits in the projected OCR track and the Governor's press conference an hour after the statement. In mid-cycle tightening episodes of this kind, the market's sensitivity shifts from the move to the implied terminal rate and the stated timing of the next step, and the RBNZ has historically been among the more track-forward of the small open economy central banks, with its published OCR projections acting as a de facto signal that subsequent meetings are graded against. The distinction worth drawing is between the pace (back-to-back moves so far) and the destination (projections pointing modestly above the expected 3.00% level): hawkish surprises in comparable cycles have come through an upward revision of the track rather than the meeting decision, hitting the front end and the currency via the rate differential channel. The Governor's own framing, that policy is moving toward neutral but remains accommodative, that timing is highly uncertain, that the next move is 'wide open', is the standard conditional-hawkish language central banks use late in the early phase of a cycle, and whether it is hardened or softened relative to that baseline is the operative tell. An external price shock as the inflation driver, with headline CPI still above the band but decelerating and growth running ahead of forecasts, is a configuration that has historically kept tightening bias alive while raising the weight placed on the following quarter's CPI print; oil persistence is the stated condition, making commodity price developments between meetings the main swing factor. Follow-ons: the projected OCR track against the near-unchanged prior forecasts, any change to the 'not pre-determined' language, and the press conference tone relative to the Chief Economist's 'direction most likely up' framing.