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All Monetary Policy Statements
Monetary Policy Statement May 2026
We explain the reasons behind our OCR decision and provide an overview of what is happening in the economy.
Published:
27 May 2026
Latest OCR decision
On Wednesday 27 May, the Monetary Policy Committee agreed to hold the Official Cash Rate at 2.25%.
Download the MPS (PDF, 6 MB)
Read the MPS online
The Middle East conflict will keep inflation above our target range this year.
The Middle East conflict will slow the economic recovery.
We will adjust interest rates to ensure that inflation returns to 2%.
What's happening in the economy?
The Middle East conflict will keep inflation above our target range this year
The conflict in the Middle East has resulted in higher petrol and diesel prices in New Zealand.
In the March 2026 quarter, inflation remained at 3.1%, which is above our 1 to 3% target range, partly due to higher fuel prices. We expect inflation to rise above 4% this year because of higher prices for fuel and many other products where fuel is a significant input cost, such as airfares and food.
The Middle East conflict will slow the economic recovery
At the start of the year, the New Zealand economy was in the early stages of recovery. Low interest rates and high prices for exports like dairy and meat have been supporting economic activity.
However, higher fuel prices mean households have less money to spend on other things. Businesses are facing reduced sales, smaller profit margins, and high uncertainty. Some businesses will delay investment and be more cautious about taking on new staff. Lower household and business spending will slow the economic recovery.
We will adjust interest rates to ensure that inflation returns to 2%
We expect inflation to fall to 2% next year.
Spare capacity
in the economy is limiting how fast prices can increase. Fuel prices are likely to remain high, but will come down over time.
We're focused on ensuring that inflation returns to 2%. We expect to increase the OCR this year.
Most recent outlook for the OCR
Decision documents
Monetary Policy Statement May 2026 data
XLSX | 2MB
Download XLSX
May 2026 presentation slides
PDF | 4MB
Download PDF