Daily newsletter · Mon 26 Oct 2026
New Zealand's Reserve Bank is expected to lift rates to 3% on Wednesday, ten days before the election
The Reserve Bank of New Zealand decides at 2pm on Wednesday in Wellington, noon in Sydney. It is expected to lift the official cash rate a quarter-point to 3%, its third rise in a row.
Three weeks ago this looked like a coin toss. In early October, markets put the chance of a rise at about 58%. ASB's Mark Smith now reckons it is about 90% priced in, and BNZ, ANZ, ASB, Kiwibank and Westpac all expect it.
Inflation is the reason. Prices rose 3.7% in the year to September, above the 1% to 3% target. ASB expects annual inflation of 4.7% by the December quarter, as fuel and a weaker kiwi push up import costs.
Australia gets its own test the same day, when September-quarter inflation figures land at 11.30am in Sydney, 1.30pm in Auckland. The RBA's cash rate is already 4.60%, and inflation reached 4.0% in August.
Its deputy governor, Andrew Hauser, warned last week that the outlook is much worse than the bank had forecast. Market odds of a rise to 4.85% on 3 November, Melbourne Cup Day, jumped from about 20% to around half.
Westpac's Kelly Eckhold expects the cash rate to reach 4% by September 2027, and says a split vote on Wednesday seems very possible. For anyone refixing a mortgage, that path matters more than this week's quarter-point.
More in
All stories →- Wednesday 11 November October's inflation report put a half-point rate rise back on the table
- Saturday 7 November America added 165,000 jobs in October, and the bond market heard a December rate rise
- Wednesday 4 November The Reserve Bank of Australia raised rates to a level Australians have not seen since 2008
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