Media release
Annual consumers price inflation increased to 3 percent in the September quarter. However, with spare capacity in the economy, inflation is expected to fall to around 2 percent by mid-2026.
Economic activity was weak over mid-2025 but is picking up. Lower interest rates are encouraging household spending, and the labour market is stabilising. The exchange rate has fallen, supporting exporters' incomes.
Global economic growth has benefited from strong AI-related investment but is expected to slow in 2026 as trade barriers weigh on activity.
Risks to the inflation outlook are balanced. Greater caution on the part of households and businesses could slow the pace of New Zealand's economic recovery. Alternatively, the recovery could be faster and stronger than expected if domestic demand proves more responsive to lower interest rates.
The Committee voted to reduce the OCR by 25 basis points to 2.25 percent. Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolve.
