The Reserve Bank feels reasonably good heading into 2026, its Assistant Governor and Monetary Policy Committee member Karen Silk says. 

“We have a pretty balanced outlook which is probably the first time for quite some time that we’ve formed that view … We’re quite confident that we’re seeing the early signs of recovery coming through,” Silk told interest.co.nz on Thursday.

Silk’s comments come a day after the Official Cash Rate (OCR) was cut to 2.25% from 2.50% with one member of the Reserve Bank’s (RBNZ) six-member Monetary Policy Committee voting to keep the OCR at 2.50% and the others voting for the 25 basis point cut.

This was the last OCR review for 2025 and following this, the bank noted any future moves would depend on how the outlook for medium-term inflation and the economy evolve. (But November’s Monetary Policy Statement doesn’t specify that the next move will be down).

So what will the Assistant Governor be watching out for over the next three months? 

With the next OCR review set for February 18, Silk said they’ll have a full round of data before the February meeting.

Monetary Policy Committee members would be looking at whether they were continuing to see the strength in those early economic indicators, she said. 

“So personal consumption is starting to grow – we’ve had three quarters of that starting to build. So is that continuing? Is that starting to grow? [And] as a consequence of that, are businesses feeling good about it?”

“So when the QSBO comes out, is that starting to show real business confidence – that they’re seeing the recovery,” Silk said, referring to the New Zealand Institute of Economic Research’s Quarterly Survey of Business Opinion (QSBO).

The QSBO has been running since 1961 and is closely watched by the RBNZ. The next QSBO is due out on January 13.

“I think certainly in the more domestic-focused businesses, we’re seeing signs of stabilisation and we’ve got a positive outlook moving forward. But we would want to be seeing that start to translate a little bit more into some of the activity numbers that are sitting there,” Silk said. 

Another thing she will be keeping in mind is how the labour market is looking. 

“As the next round of labour numbers come out – just a continual broadening of some of that emerging positive outcomes that we saw in this round of data … Average hours worked and paid for are starting to improve, job vacancies are starting to lift – it’s those sorts of things.”

Statistics NZ’s labour market statistics for the December quarter are due out on February 4.

Bring back boring?

On Wednesday, acting Governor Christian Hawkesby said the RBNZ wants to be in a position next year where the bank and monetary policy is off the front pages.

“Bring back boring. Let everything else drive the economy and we can sit in the back seat.”

When asked if she also wanted to bring back boring, Silk said: “Absolutely.”

“I wholeheartedly agree with Christian. We would rather not be driving the cycle. We want to respond to the cycle.”

Silk said if they were sitting in the back seat and it’s boring in terms of the RBNZ, that means things are going well in the economy.

‘Did a little jig’

Asked about her highlights and lowlights, Silk said she was looking forward to the RBNZ not being in the media.

But a highlight for her was when annual inflation, as measured by the consumer price index, fell below 3%.

“I literally did do a little jig in my room … having come in when inflation was at 7.3%, joining the Committee at that point in time – getting it below 3%, has felt extremely good to get us back to this point.”

“The lowlight around that is, it doesn’t necessarily create a wonderful outcome for every New Zealander as you go through that process. But over the long-term, it is the right thing for the economy,” Silk said.

Under its monetary policy mandate, the RBNZ is tasked with achieving and maintaining future annual inflation between 1% and 3% over the medium-term, with a focus on keeping future inflation near the 2% mid-point, measured by Statistics NZ’s Consumers Price Index (CPI). The annual rate of the CPI was above 3% for 13 consecutive quarters between the June 2021 and June 2024 quarters, peaking at 7.3% in the June 2022 quarter.

Breman brings global economy knowledge

With incoming Governor Anna Breman set to start on December 1, Silk says she is looking forward to having her with them. 

“I’ve had a number of meetings with her, just filling her in on things that are going on. What’s happening in the economy, what’s happening with the areas that I particularly cover. So what’s happening in [financial] markets, what’s happening with cash, what’s happening in the payment sector.”

Breman, who has been working as the First Deputy Governor of Sweden’s central bank, will be the first woman and non-New Zealander to fill the role. 

Silk has spent a long time in her career being the only woman in a room and said she loves seeing more women in senior roles. 

When it comes to the Monetary Policy Committee and Breman joining the group, Silk said she’s coming into it as a very qualified economist. 

“I’m sure she’s going to add her own perspective on it. She’s coming from Europe so she’ll have a good level of knowledge around what’s going on in the global economy to bring to the Committee,” Silk said.

“It’ll be great to have that brought into the Committee and have that add to the Reserve Bank as well. We all look forward to her joining.”

Following the OCR announcement on Wednesday, Finance Minister Nicola Willis told interest.co.nz that Breman could look forward to joining a central bank that has delivered on its mandate.

She could also look forward to joining a bank that “is ensuring New Zealand has low, stable inflation, that is managing its functions better than it has in the past and that is really committed to being better in the future”, Willis said.