Summary of RBNZ's Monetary Policy Statement - February 18, 2026

The Reserve Bank of New Zealand (RBNZ) has maintained the Official Cash Rate (OCR) at 2.25%, reflecting a cautious yet balanced approach in its latest monetary policy statement. The RBNZ's stance remains accommodative, indicating that monetary conditions will continue to support the economy for an extended period. The decision was unanimous among the Committee members.

Key Highlights from the RBNZ Statement

• OCR Unchanged: The OCR remains at 2.25%, with a unanimous decision from the Committee.
• Inflation Trends: Recent inflation has exceeded the target range of 1-3%, currently at approximately 3.1%. However, the RBNZ expects inflation to stabilize around 2% within the next year.
• Economic Capacity: The economy is still operating with significant spare capacity, indicating a negative output gap.
• Wage Growth: Wage growth is moderate, and core inflation is under control.
• Gradual Policy Normalization: The RBNZ emphasizes that any normalization of policy will be gradual and contingent on further economic recovery.

Inflation Outlook

The RBNZ is optimistic about inflation returning to target levels, with the increase in CPI inflation primarily driven by food prices, electricity costs, and volatile tradable goods. The risks to inflation are currently assessed as balanced.

Growth and Labor Market Conditions

The RBNZ describes the economic recovery as early but stable, supported by high commodity prices and previous rate cuts. GDP is rebounding following a contraction in mid-2025, although unemployment remains elevated at around 5.4% but is stabilizing.

Remarks from Governor Anna Breman

Governor Anna Breman, who has been in office since December, maintained a cautious tone during the press conference. Key points from her remarks include:

• The OCR path is conditional and not a firm commitment.
• A rate hike by the end of the year is possible but not currently planned.
• The Bank will not raise rates until there is clear evidence of stronger growth and inflation pressure.
• Any potential tightening would be gradual, and a fourth-quarter hike is not fully embedded in projections.
• The housing market is not expected to see a sharp increase in prices.

Market Reaction

Despite the slightly revised higher rate path, the market interpreted the RBNZ's message as dovish. The New Zealand dollar (NZD) weakened significantly, falling approximately 0.6-0.9% against a basket of currencies, with the NZD/USD pair declining by about 0.92% during the session. This reaction indicates that investors had anticipated a stronger signal for tightening but received a message emphasizing patience and data dependence instead.