Reserve Bank surprises economists by holding the cash rate at 2.75% days before the vote

The Reserve Bank's monetary policy committee voted 4-3 on Wednesday to hold the official cash rate at 2.75 percent, defying widespread expectations of a 25-basis-point rise to 3.0 percent just 10 days before the election. Governor Anna Breman voted with the majority to hold while chief economist Paul Conway backed a hike, and the bank pointed to rising fuel prices from global energy disruptions and a weaker exchange rate adding to near-term inflation pressure. The kiwi dollar fell about 1.3 percent to around 56 US cents on the announcement. BNZ's Stephen Toplis said he was flabbergasted and warned of entrenched inflation, while the bank and markets still expect further hikes, most likely in December and early next year. National's Nicola Willis credited the government's financial discipline for the hold, a claim one economist called politicising. Also in this briefing: A poll puts National below 25% as Opportunity holds the balance of power; Police look into multiple-voting claims as advance voting draws 175,000 ballots; Jewish Council warns of escalating threats against Jewish New Zealanders.

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