Review of RBNZ May 2026 Monetary Policy Statement

The RBNZ maintained the OCR at 2.25% in May 2026 despite a hawkish split in the committee and upgraded its path for future rate hikes. Westpac expects the tightening cycle to begin in September, targeting a 3% OCR by the end of the year.

Key Takeaways

• 1.The RBNZ held the Official Cash Rate (OCR) at 2.25% in a split 3:3 decision, with the Governor's casting vote maintaining the status quo.
• 2.RBNZ significantly revised its OCR forecast higher, signaling three 25bp increases in 2026 and a peak of 3.26% by late 2028.
• 3.Inflation is projected to peak at 4.3% in Q3 2026 due to Middle East conflict-driven energy price pressures, eventually returning to 2% by mid-2027.

Table of Contents

• Waiting for evidence
• Key take out: OCR rising in 2026, but a July start remains in the balance.
• Westpac's OCR call.
• RBNZ forecast detail.
• Alternative scenarios.
• Key things to watch ahead of the RBNZ's 8 July OCR Review.
• Notable quotes.
• Current state of the economy
• The Middle East
• Growth outlook
• Output gap/excess capacity
• Inflation outlook
• Inflation expectations
• Current policy stance
• Risks to the inflation outlook
• Global growth
• Outlook for monetary policy

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