The Only Major Central Bank Expected to Hike This Week Isn't the Fed — It's New Zealand

The Short Answer

The Reserve Bank of New Zealand (RBNZ) is widely expected to raise its Official Cash Rate (OCR) by 25 basis points to 3.00% on Wednesday, October 28, 2026 — even though the central bank itself signalled in September that the next hike would not come until December. Markets price the move at roughly 80–90%, all four of New Zealand's major banks forecast it, and it would make the RBNZ the central bank that actually moves in a week when the US Federal Reserve, the Bank of Japan and the European Central Bank are all expected to stay on hold.

What Happened

This is central-bank week almost everywhere. The Fed meets October 27–28, and Reuters reporting on Monday's Asian open says markets assume the Fed will stand pat, with about an 80% chance priced for a US hike in December instead. Much the same hold is priced for the Bank of Japan and the ECB. New Zealand is the outlier: Reuters notes the country's central bank is "widely expected to raise rates on Wednesday," and JPMorgan's global head of economics, Bruce Kasman, told Reuters that a "relatively shallow rate hike cycle is underway" globally, with Canada also expected to start tightening.

The twist is that the RBNZ talked markets out of exactly this move just weeks ago. In September it raised the OCR to 2.75%, but pushed back against expectations of a large tightening cycle. Its own projections pointed to the next hike only in December or the first quarter of 2027, and a peak of just 3.25% — not until 2028–2029.

Why It's Blowing Up Now

Oil changed the maths. Brent crude jumped 6.2% last week to its highest weekly close since mid-2022, trading around $115 a barrel on Monday even after easing about 1% on reports that Qatari mediators were in Tehran on Sunday in a US-coordinated de-escalation effort. For a small, import-dependent economy, expensive oil feeds straight into inflation.

The kiwi dollar is weak. The New Zealand dollar traded near $0.572 on Monday, and a soft currency raises the price of everything the country imports — another inflation channel the RBNZ cannot ignore.

Inflation is threatening to overshoot 4% again. ING, which expects a 25bp hike on October 28 with a hawkish-leaning statement, says rising oil prices, higher global front-end rates and kiwi weakness all point to a risk of inflation overshooting 4.0% in the fourth quarter. Third-quarter inflation eased to about 3.7–3.8% from 4.1%, but bank economists warn it could re-accelerate — BNZ economists have flagged figures as high as 4.7% for the fourth quarter, well above the RBNZ's 1–3% target band and its earlier 3.9% projection.

That combination flipped the forecasters. ANZ, ASB, BNZ and Westpac — all four major New Zealand banks — now forecast an October hike, with markets putting the odds at nearly 90% in one tally and around 80% in others. Kiwibank is the notable dissent, arguing the country does not need another hike now.

Key Facts

• Decision day: Wednesday, October 28, 2026 — the same day the Fed announces its decision.
• Expected move: OCR up 25 basis points, from 2.75% to 3.00%.
• Market pricing: roughly 80–90% probability of a hike, up sharply from about 56% earlier in October.
• The guidance gap: in September the RBNZ pointed to December or Q1 2027 for the next hike, with a 3.25% peak in 2028–2029.
• What changed: Brent crude around $115 a barrel, a kiwi near $0.572, and fourth-quarter inflation risk above 4%.
• What may follow: ING expects another hike in December or February, with a terminal rate of 3.25–3.5%.

What's Next

Wednesday now carries a double decision: Wellington and Washington on the same day. If the RBNZ hikes, attention turns to its statement — flagging December would confirm a genuine tightening cycle. If it holds instead, forecasters warn the kiwi could fall further, adding to the very inflation problem the bank is trying to solve. Either way, New Zealand is the clearest test case of what this oil shock is doing to central banks: even a bank that promised patience in September is being pulled forward by prices it does not control.

This post reports market expectations and central-bank news. It is not financial advice.

Sources

• Reuters — Asian shares make cautious start, Brent eases from six-month high (Oct 26, 2026)
• Reuters via SRN News — Currency markets subdued ahead of pivotal central bank week (Oct 26, 2026)
• ING THINK — RBNZ to hike next week as inflation risks mount
• The Global Banker — RBNZ signals December OCR hike, but banks and markets price a 25bp rise to 3% on 28 October
• TalkMarkets — RBNZ Expected To Hike 25bp As Inflation Risks Overshoot 4%

FAQ

When is the RBNZ rate decision and what is expected?

The Reserve Bank of New Zealand decides on Wednesday, October 28, 2026. Markets and all four major NZ banks expect a 25-basis-point hike, lifting the Official Cash Rate from 2.75% to 3.00%.

Why would the RBNZ hike when it signalled December?

Since its September meeting, oil has surged to around $115 a barrel and the New Zealand dollar has weakened, raising the risk that inflation overshoots 4% in the fourth quarter — well above the bank's 1–3% target band.

What is the US Federal Reserve expected to do the same day?

The Fed is expected to hold rates steady on October 28, with markets pricing roughly an 80% chance of a US hike in December instead. That makes New Zealand the major central bank actually expected to move this week.

Could the RBNZ hike again after October?

Possibly. ING expects another hike in December or February and sees a terminal rate of 3.25–3.5%, while some forecasters see the rate eventually peaking higher if inflation stays above 4%.