Reserve Bank holds official cash rate at 2.75 percent in split vote

The Reserve Bank has held the official cash rate (OCR) at 2.75 percent, in a 4-3 vote of its Monetary Policy Committee, the group that sets the rate. According to RNZ, economists had widely expected a rate rise that week.

The OCR is the Reserve Bank's benchmark interest rate. The bank says it is its main tool for keeping inflation between 1 and 3 percent. Annual consumer price inflation was 3.7 percent at the time of the decision, the bank said.

Before the announcement, local economists had predicted a rise of a quarter of a percentage point, taking the OCR to 3 percent, the NZ Herald reported.

The bank's most recent move was in September, when the committee reached consensus to raise the OCR by a quarter of a percentage point to 2.75 percent. When it made that move, annual inflation had risen to 4.1 percent, according to the bank's September monetary policy report.

Earlier in the year, the bank held the OCR at 2.25 percent in May in a split decision. Reuters reported that the bank warned at that time that rates may go up sooner and by more than expected.