Chapter 1: Why did the Reserve Bank of New Zealand hold the official cash rate at 2.25%?
They've definitely stayed quite balanced on this. They're showing some patience with wanting to see how things do eventuate. Kia ora and welcome to a special reactionary episode of the New Zealand Property Market Podcast brought to you by Cotaldi on the 18th of February 2026. I'm Head of Research Nick Goodall and I'm joined as per usual by Chief Economist Calvin Davidson.
Calvin, certainly no surprise with the official cash rate on hold at 2.25% but of course it was the first statement underneath for the Reserve Bank, underneath the watch ship of Anna Bremen, the new Governor. What did you learn mate?
Well, yeah, but for everyone is the way I'm sort of summing this up. I mean, you know, a lot of things were sort of, obviously the OCR itself was left unchanged, but a lot of the economic forecasts were sort of as anticipated as well. They've got economic growth coming back, you know, GDP rising about 3% this year, kind of pretty standard forecast.
employment growth coming through, the unemployment rate edging lower. They've got that going down to about 5% by the end of the year. So that's sort of the vibe is similar to last time. They said probably think that CPI inflation is back within the target already in the current quarter. So, you know, a temporary kind of rise above 3% tail end of last year, back probably within target right now.
So yeah, lots of Lots of things as you'd expect. They talked about spare capacity being a key factor there, bringing down inflation again, and sort of fits really strongly with the guidance they gave in the last statement. So yeah, and statements like quotes from the release, things like, if the economy evolves as expected, they'll keep monetary policy accommodative for some time.
So sort of hints at no rush to shift. However, one thing that did change, just ever so slightly, was the official cash rate track itself. So now it looks pretty likely that they plan to, rather than the first increase coming in early next year, early 2027, they now plan to push that through into late 2026. Now the timing's a little bit hard to pin down because of the way they express the numbers.
I guess they give themselves a wee bit of regular room but it looks like tail end of last tail end of this year i should say so yeah i mean there's nothing necessarily surprising there either because it's it's what markets are anticipating it's kind of what we know if the economy does start to pick up we'll probably see a bit more inflationary pressure and you'd want to
take away some of that monetary stimulus that we've got now.
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Chapter 2: What are the economic forecasts for GDP growth and inflation expectations?
So they use the phrase settings will gradually normalize. So implies a steady return to sort of about that 3% mark over a series of months. So yeah, I guess a bit for everyone, as I say, I mean, if you were in the camp that says, OK, no rush to tighten, well, you've definitely got that because they're not suggesting any rush to tighten.
but also if you were saying okay well i think they'll start tightening this year well you know that's that's in there as well so yeah i'd call it i'd call it um you know as expected um pretty pretty steady you know nothing sort of shocking in there the language seemed the same so um yeah i guess we'll kind of you know digest it and move on
Yeah, I think it's an interesting one. But the words I think of are balanced, as you say, but everyone would have been wondering how they're going to react to the last few months of data.
And we've talked about in the last few weeks that every time a new data release comes out, there's two ways to read it all the time, whether it's the disappointing unemployment figures, which you can read in two ways once you get below the details, the CPI, of course, going above band, but like you said, expectation of that still to drop down. And when everyone talks about core inflation,
in terms of that medium-term inflation as well. There's nothing to panic there. So yeah, I think you could read all those things sort of two ways. They've definitely stayed quite balanced on this. They're showing some patience with wanting to see how things do eventuate. I think it's an interesting time, right? Like really hard to compare November to February.
A lot happens in that time, but you don't necessarily get enough data
over that genuine period of time either through to understand what's actually happened in December January you know halfway through February how has this you know economy come back how have people come back to the new year with their expectations on this economy on their jobs and everything else too so it does feel like yeah there's a lot of patience in there as well um like like you said I
I think that's a good point that they continue to talk about the fact there's spare capacity in the economy. And that's why they're happy to keep it sort of the accelerator on the economy, I suppose, if you think about that with the OCR remaining below that neutral position of around about 3%. So, yeah, I think it's a pretty good summary, mate.
I mean, maybe worth noting, the vote, of course, was unanimous. No surprises there to hold it.
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Chapter 3: How does the housing market react to the current economic climate?
The next Reserve Bank decision for the official cash rate, of course, just a review, not the full statement. On the 8th of April, we're in about six weeks away. We don't get Q1 CPI inflation data until the 21st of April. So that will be after the next decision.
labour market data on the 6th of May for Q1, and then we've got the monetary policy statement in full with all the forecasts and everything on the 27th of May. So they will have the CPI inflation and the labour market data, not the GDP data for Q1, but they will have Q4 data and that now casts GDP from their own model as well.
So, you know, that 27th of May probably shapes up as a pretty crucial one when we have, you know, a bit of data from 2026 itself. So yeah, a few key dates to put in the diary and watch out for. But otherwise, that's probably us for the day. Calvin, any final words before I close us out?
No, no, that's it, as I say, but for everyone. So, you know, if you're, depending on which camp you're in, you could probably find something for you in this statement. So pretty balanced.
Which is like all the data in the last couple of months. So yeah, fair play. Balanced, patient, but for everyone, like it. That'll be one of our, one of those will give us the title for today, I suspect. So yeah, great stuff. And thanks for, yeah, digesting so quickly so we could get recording and we'll get that out and about to everyone very soon. So just last minute to say thanks for listening.
Please do make sure you subscribe to the show and feel free to get in touch. My name is Nick. He's Kelvin. You've been listening to the Zealand Property Market Podcast.
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Chapter 4: What implications do the economic indicators have for monetary policy?
Mā te wā.