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The Economic Outlook
Monetary Policy Statement, September 2026
This presentation represents the view of the Monetary Policy Committee (MPC), not of any individual member.
Disclaimer
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This presentation represents the view of the Monetary Policy
Committee (MPC), not of any individual member.
The Monetary Policy Statement
at a glance
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• The Reserve Bank’s Monetary Policy Statement (MPS) provides a
quarterly picture of the New Zealand economy and where we
think it is heading next.
• It sets out how the MPC has set monetary policy and how it plans
to do so in the future.
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• Inflation in New Zealand and overseas has increased due to the Middle East
conflict.
• Economic activity in New Zealand is recovering, although the conflict has
caused a delay. The recovery is expected to broaden across the economy.
• Conditional on our central forecast for global oil prices, we project inflation
to remain elevated in the near term.
• Spare capacity in the labour market is projected to persist, which will limit
wage growth.
• Inflation is projected to return to within the target band in the first half of
2027, before settling near 2 percent.
• On 2nd September, the Monetary Policy Committee agreed by consensus to
increase the OCR by 25 basis points to 2.75%.
Overview
INFLATION IS EXPECTED TO
RETURN TO TARGET IN 2027.
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Conflict in the Middle East has led to significantly
higher oil prices
Dubai oil prices
(daily)
Source: Bloomberg, LSEG.
Annual CPI inflation is projected to remain
elevated in the near term
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CPI inflation contributions
(annual)
Source: Stats NZ, RBNZ estimates.
Annual CPI inflation is projected to return to near
the 2 percent target mid-point next year
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Headline, tradables, and non-tradables inflation
(annual)
Source: Stats NZ, RBNZ estimates.
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Inflation expectations of professional forecasters and business leaders
(annual, years ahead)
Inflation expectations have declined
Source: RBNZ Survey of Expectations.
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Measures of core inflation have increased,
but most remain within the target range
Headline and core inflation measures
(annual)
Source: Stats NZ, RBNZ estimates.
THE NEW ZEALAND ECONOMY IS
RECOVERING.
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Real and potential GDP
(seasonally adjusted)
The Middle East conflict has delayed the recovery
Source: Stats NZ, RBNZ estimates.
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Contributions to production GDP growth
(annual)
Strength in exports is supporting the recovery
Source: Stats NZ, RBNZ estimates.
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Real house prices and sustainable indicators
(index)
Real house prices have been declining,
weighing on household wealth
Source: Cotality, RBNZ estimates.
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Real household disposable income
(seasonally adjusted)
Real household income growth has been weak
Source: Stats NZ, RBNZ estimates.
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Output gap
(share of potential GDP)
Spare capacity in the economy is likely to persist
Source: Stats NZ, RBNZ estimates.
SPARE CAPACITY IN THE LABOUR
MARKET IS LIMITING WAGE GROWTH.
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Unemployment rate
(unemployed people as a share of the labour force, seasonally adjusted)
The unemployment rate is projected to decrease
Source: Stats NZ, RBNZ estimates.
Source: Stats NZ, RBNZ estimates.
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Firms are hiring less but retaining staff they
currently have
Job finding rate
(seasonally adjusted, share of unemployed)
Source: Stats NZ, RBNZ estimates.
Job separation rate
(seasonally adjusted, share of employed)
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Unemployment by age cohort
(unemployed people as a share of the labour force, seasonally adjusted)
Unemployment is elevated for younger cohorts
Source: Stats NZ, RBNZ estimates.
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Unemployment by region
(unemployed people as a share of the labour force, seasonally adjusted)
Unemployment rates are higher in the North Island
than in the South Island
Source: Stats NZ, RBNZ estimates.
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Real average hourly earnings
(annual, private sector, ordinary time, Quarterly Employment Survey)
Real average hourly earnings growth has turned
negative
Source: Stats NZ, RBNZ estimates.
OCR INCREASED TO 2.75%.
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OCR increased to 2.75%
Official Cash Rate
(quarterly average)
Source: RBNZ estimates.
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• Inflation in New Zealand and overseas has increased due to the Middle East
conflict.
• Economic activity in New Zealand is recovering, although the conflict has
caused a delay. The recovery is expected to broaden across the economy.
• Conditional on our central forecast for global oil prices, we project inflation
to remain elevated in the near term.
• Spare capacity in the labour market is projected to persist, which will limit
wage growth.
• Inflation is projected to return to within the target band in the first half of
2027, before settling near 2 percent.
• On 2nd September, the Monetary Policy Committee agreed by consensus to
increase the OCR by 25 basis points to 2.75%.
Overview
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APPENDIX.
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Refined fuel prices have increased by more than
crude oil prices
Source: Bloomberg.
Oil and Singapore refined product prices
(1-month futures)
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Consensus forecasts for global CPI inflation
(annual, weighted by New Zealand trade)
Source: Stats NZ, Haver Analytics, Bloomberg, RBNZ estimates.
Trading-partner inflation has increased, reflecting
higher global energy prices
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Consensus forecasts for global GDP growth
(annual, weighted by New Zealand trade)
Source: Stats NZ, Haver Analytics, Bloomberg, RBNZ estimates.
Growth in New Zealand’s trading partners has been
resilient in the face of the Middle East conflict
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Change in market-implied policy rate expectations for the end of 2026
Market participants have revised up expectations
for policy rates since the conflict began
Source: Bloomberg.
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New Zealand export prices
(real, foreign currency terms)
Prices for some of New Zealand’s commodity
exports have been elevated
Source: Stats NZ, RBNZ estimates.
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Business investment
(seasonally adjusted)
Strong performance of many exporting sectors has
supported a recovery in business investment
Source: Stats NZ, RBNZ estimates.
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Declining real household wealth has weighed on
consumption recently
Source: Stats NZ, RBNZ estimates.
Household real net wealth
(seasonally adjusted)
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Private sector LCI wage inflation
(annual)
Spare capacity in the labour market is limiting
wage growth
Source: Stats NZ, RBNZ estimates.
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Inflation expectations of households
(annual, years ahead)
Household inflation expectations have eased at
longer horizons
Source: RBNZ.
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Inflation expectations of businesses
(annual, years ahead)
Business inflation expectations have eased
Source: RBNZ.