OCR changes: ‘Probability’ doesn’t mean ‘most likely outcome’, RBNZ clarifies

Wednesday, 17 December 2025

Wholesale interest rates have eased slightly since governor Anna Breman started to temper expectations of rate rises, though financial markets are still pricing in the likelihood (more than 50% chance) of two rate rises next year.

The Reserve Bank has clarified repeated comments from governor Anna Breman that there is a “probability” the bank will cut the Official Cash Rate in the near term were not intended to imply that was likely.

The newly appointed governor said in a statement on Monday that the Monetary Policy Statement it issued in November “indicates a slight probability of another rate cut in the near term”.

The rate track showed the forecast level of the OCR dipping slightly below 2.25% next year, but only to 2.2%, not enough to justify a further 25 basis point rate cut, with the next implied move expected to be a rate rise in 2027.

Swedish-born Breman reiterated to RNZ “there is still a small probability, but it’s still a probability, that we’ll do another rate cut in the near term”.

Clarifying the comments to The Post, a Reserve Bank spokesperson made clear they did not mean a further rate cut was likely.

“Probability and possibility are interchangeable in this instance, as any probability that is greater than zero is a possibility,” he said.

“’Probability’ should not be interpreted as the most likely outcome.

“The point is that the rate track troughs below 2.25%. Therefore, there is a ‘slight probability’ of another rate cut.”