Sarah McMillan/cvnznews.com
The Reserve Bank has left the Official Cash Rate (OCR) unchanged at 2.75%, defying widespread expectations of a rate hike less than two weeks before Election Day.
The decision came despite rising global oil prices and forecasts that annual inflation could climb to 4.4% by the end of the year.
National leader Christopher Luxon said the hold was a reminder of “how much is at stake” at the election, arguing disciplined government spending had helped ease inflation pressures. Finance spokesperson Nicola Willis said the Reserve Bank had recognised inflation was not spreading through the economy as strongly as expected, but warned higher oil prices remained a risk.
Labour’s finance spokesperson Barbara Edmonds rejected National’s claims, accusing Willis of “celebrating a sluggish economy”. She pointed to rising hardship withdrawals from KiwiSaver, business failures and unemployment as signs many New Zealanders were still struggling.
Economist Shamubeel Eaqub said the Reserve Bank had made the right call, arguing higher interest rates would only increase pressure on households already facing high living costs, weak wage growth and a soft labour market.
Green co-leader Chlöe Swarbrick said the decision highlighted New Zealand’s vulnerability to imported fuel prices.
“Higher mortgage rates can’t re-open the Strait of Hormuz,” she said, arguing the long-term answer was greater investment in electrification, renewable energy and public transport.
With economists expecting a rise, the Reserve Bank’s surprise move has intensified debate over inflation, living costs and economic management as parties make their final pitch to voters before election day.
Reserve Bank Governor Anna Breman says next week’s general election had no bearing on the decision to hold the OCR at 2.75%.
Asked whether the election had been considered, Breman said the Monetary Policy Committee was focused on returning inflation to its target over the medium term.
She was also asked whether there had been any discussions involving Finance Minister Nicola Willis ahead of the decision.
“No,” Breman replied.
Breman also declined to comment on Willis’ claim that National’s spending discipline and economic management had helped bring the OCR down from 5.5% to 2.75%.
She said commenting on matters outside the Reserve Bank’s mandate would not be appropriate.
