RBNZ set to hold interest rate as new Governor Breman takes center stage
- The Reserve Bank of New Zealand is set to hold the key interest rate at 2.25% on Wednesday.
- All eyes will be on the RBNZ’s OCR forecast and Governor Breman’s first press conference.
- The New Zealand Dollar could experience volatile trading on the RBNZ policy announcements.
The Reserve Bank of New Zealand (RBNZ) remains on track to maintain the Official Cash Rate (OCR) at 2.25% after concluding its first monetary policy meeting of this year on Wednesday. The decision to keep its benchmark rate steady would follow three consecutive cuts, signaling a pause in the current easing cycle.
The decision is widely expected and will be announced at 01:00 GMT, accompanied by the Monetary Policy Statement (MPS), the quarterly inflation and OCR projections. RBNZ Governor Dr. Anna Breman, who is debuting at her first Monetary Policy Committee meeting, is also set to hold her first post-monetary policy meeting press conference at 02:00 GMT.
The New Zealand Dollar (NZD) could see a big reaction if the RBNZ surprises or offers clear hints on the path forward on interest rates.
What to expect from the RBNZ interest rate decision?
The RBNZ is finally expected to pause its interest rate-cutting cycle this week under the new leadership of Governor Breman.
The real question is whether the Kiwi central bank signals an end to the easing cycle amid rising inflation expectations, stabilizing labor market and a gradual economic recovery. Therefore, the updated OCR forecast will be closely scrutinized.
During the press conference following the November policy meeting, then Governor Christian Hawkesby noted that “the central projection is based on cash rate on hold through 2026,” adding that “we're now seeing economic indicators picking up across all high frequency indicators.”
New Zealand’s two-year inflation expectations, seen as the time frame when RBNZ policy action will filter through to prices, ticked up to 2.37% in the first quarter of 2026, against the 2.28% seen in the final 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%, according to data from Stats NZ. However, New Zealand’s Employment Change came in at 0.5% in Q4, up from 0% in Q3, beating the consensus forecast of 0.3%.
Strategists at BBH said: “The RBNZ is expected to bring forward its OCR hike projections because New Zealand inflation is running hot and the job market is improving. The swaps curve implies 50bps of hikes in the next twelve months, which is NZD supportive.”
How will the RBNZ interest rate decision impact the New Zealand Dollar?
The NZD/USD pair is in a bullish consolidative phase below the six-month high of 0.6094 ahead RBNZ event risk. Expectations of divergent monetary policy outlooks between the US Federal Reserve (Fed) and the RBNZ have played out in favor of the Kiwi, thus far.
The next leg north in the major depends on whether the RBNZ leans toward a hawkish guidance following the expected rates on hold decision. The NZD could also see fresh buying interest on an upward revision to the OCR forecast, which could imply that rate hikes are coming.
On the contrary, if the central bank downplays inflation risks while refraining from offering any clues on the direction of rates, the Kiwi Dollar could witness a steep correction.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“Kiwi bulls seem to be gathering pace for the next push higher. The 14-day Relative Strength Index (RSI) holds comfortably above the midline, while a Golden Cross is in the making. The 50-day Simple Moving Average (SMA) is on the verge of crossing the 200-day SMA for the upside.”
“The pair needs to take out the 0.6100 barrier on a sustained basis for a fresh uptrend. The next relevant bullish targets align at the 0.6150 psychological level and the 0.6200 round figure. On the downside, strong support is seen at the 0.6000 threshold, below which the February 6 low of 0.5928 will be tested. Failure there opens the door for a deeper pullback toward the 50-day SMA and 200-day SMA convergence at around 0.5875,” Dhwani adds.
Economic Indicator
RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after each of its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.
Read more.Next release: Wed Feb 18, 2026 01:00
Frequency: Irregular
Consensus: 2.25%
Previous: 2.25%
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby's press conference.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as 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 important for 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 use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact 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 with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
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