The OCR stayed at 2.75% on Wednesday. Your overdraft is still 10.12%, and the Reserve Bank just said most firms have not rebuilt their margins

The Reserve Bank held the OCR at 2.75% on Wednesday 28 October 2026 when nearly everyone expected a rise to 3%. If you run a business overdraft, nothing changed on your statement this week, and that is not the relief it sounds like. The average base rate banks quoted on a new small-business overdraft was already 10.12% in September, up from 9.73% in June, and the same meeting record says all seven committee members expect to tighten further. It also says most firms have not managed to rebuild their margins. That second line is the one worth your time.

Four voted to wait, three voted to raise, and all seven want it higher

Here is what happened. The Monetary Policy Committee voted 4-3 to leave the Official Cash Rate (the OCR, the overnight rate the Reserve Bank sets, which floating business rates are priced off) at 2.75%. Anna Breman, Carl Hansen, Prasanna Gai and Rebecca Williams voted to hold. Paul Conway, Hayley Gourley and Karen Silk voted for a quarter-point rise to 3%.

Three things in the record matter more than the vote.

• The OCR has already gone up twice this year: from 2.25% to 2.50% on 8 July 2026 and to 2.75% on 2 September 2026. The four who held did so to see what those two rises do, not because they think rates are high enough.
• The committee's own words: "tighter monetary policy is likely to be required, but remains conditional on the economic outlook". Every member signed that.
• It expects annual inflation to climb to 4.4% in the December quarter, largely because of fuel futures prices. The target band is 1 to 3%. September's figure was 3.7%.

So the honest summary for an owner is this. The rate you pay did not move on Wednesday. The direction has not changed. And the next decision, on Wednesday 9 December 2026, comes with a full Monetary Policy Statement and a new rate track.

What your overdraft actually costs now

Forget the OCR for a moment and look at the number on your own facility. The Reserve Bank's monthly B3 table records the weighted average base rate banks quoted on a new overdraft for a small or medium business (non-farm). It was 10.12% in September 2026. In June it was 9.73%. In September 2025 it was 10.18%, and in September 2024 it was 12.42%.

Two things fall out of that.

The OCR rose 0.50 points between June and September. The overdraft rate rose 0.39. Banks passed on less than the full increase, and the committee says why: "subdued credit demand and higher deposits have resulted in less pass-through of wholesale rate increases to both deposit and lending rates". The flip side is that the six-month term deposit rate barely moved either, 3.45% in June to 3.55% in September.

The bigger point is the gap. The OCR is 2.75% and your overdraft base rate is around 10.12%. That is 7.37 points of bank margin and overdraft pricing sitting on top of the official rate. The Reserve Bank controls the 2.75. You control how much of your debt sits in the 10.12 format.

Take a cafe or salon with a $120,000 overdraft that is fully drawn most of the month. At 10.12% that is about $12,144 a year in interest, roughly $1,012 a month, before any facility fee. The June-to-September rise alone added about $468 a year. Had the committee hiked on Wednesday and the bank passed on all of it, the extra would have been about $300 a year. Small against the $12,144 you are already paying. The rate decision was never your biggest interest problem. The structure of the debt is.

The Reserve Bank said something about your prices, not just about rates

This is the part of the record that most of the coverage skipped, and it is written for you.

"Subdued growth in household spending is limiting the ability of some firms to pass on higher costs to restore profit margins."

And from the members who voted to hold: "a salient issue is whether businesses are taking the opportunity to increase their margins, which does not appear to be the case so far".

Read that plainly. The central bank looked at the data and at its own business visits, and concluded that firms have absorbed cost rises rather than passing them on. It also noted that in the September Quarterly Survey of Business Opinion fewer firms expected to raise prices than in June, and that employment intentions remain weak. Businesses are investing to cut costs, not to expand.

If you are one of those owners who has been holding prices because every customer conversation feels fragile, you are in the majority, and the majority has thinner margins than a year ago. The committee is worried that if pass-through happens later it could be larger. For you, later is worse: a price rise in a quarter where inflation is forecast at 4.4% lands on customers who have just seen their own bills jump, and it lands next to everyone else's.

Fuel, power and rates: the costs under your own numbers

The Stats NZ release behind the 3.7% figure (22 October 2026) lists what actually rose over the year to September. Pick the ones that are on your profit and loss.

• Petrol up 19.1% over the year, the largest single contributor, although it fell 6.5% in the September quarter itself. If petrol had not moved, annual inflation would have been 3.2%.
• Electricity up 9.3%.
• Local authority rates and payments up 6.2%, after 8.8% the year before. If you own your premises you pay that directly; if you lease, check whether your lease passes it through.
• International airfares up 12.5% over the year, and 14.3% in the quarter.
• New housing construction costs up 3.2%, with respondents citing materials, subcontractors, labour and fuel.

More than 85% of the items in the basket rose in price over the year. Only about 13% fell, the lowest share since the December 2023 quarter. That is what "broad-based" means in the committee's language, and it is why the three dissenters wanted to act now.

Between now and 9 December

The committee said that "information arriving over the next six weeks could meaningfully change the appropriate policy stance in either direction". It also set out all three paths in the record: further tightening if domestic pricing pressure does not moderate, holding if pricing stays subdued, and easing if the world economy turns sharply down. Westpac's economists still forecast a quarter-point rise in December and a peak of 4% in September 2027, while calling December "not a done deal". That is a bank forecast, not a plan, and the Reserve Bank has not published a new track since September.

What you can do with that is simple. Do not build a 2027 budget on rates falling. Build it on your overdraft staying near 10%, with a line for a quarter point either way, and then make the decisions below so the OCR matters less to you whichever way it goes.

The November B3 release on 6 November will show October's lending rates. The Financial Stability Report on 11 November will say what the Reserve Bank thinks of bank lending conditions. Neither changes your rate; both tell you what your bank is being watched on.

Debt, deposits and the price of your business

Three practical things, then the exit point.

First, the deposit gap. If you keep $30,000 in a six-month term deposit at around 3.55% while running a $30,000 overdraft at around 10.12%, the gap of 6.57 points costs you about $1,971 a year for the comfort of seeing a balance. Keep a genuine buffer for wages and GST, and ask whether the rest is really a buffer or a habit.

Second, the format. An overdraft is the most expensive way to carry a permanent balance. If $60,000 of your $120,000 has been drawn every day for a year, it is not working capital, it is a term loan priced as an overdraft. The record notes that some term lending rates for businesses have fallen even as wholesale rates rose. Ask your bank for the term rate for that core balance and compare it with 10.12%. We are not quoting a term rate here because the Reserve Bank does not publish one for small business, so get it in writing.

Third, pricing. Use the committee's own finding. Your competitors have mostly not moved. Pick the lines where customers are least price-sensitive and move those first, and measure the volume you lose rather than fearing it. The pricing power calculator shows how much volume you can afford to give up at a given margin.

Now the exit. A buyer's bank will value your business on the profit left after interest, and will lend to the buyer at today's rates, not 2021's. A business that needs a $120,000 overdraft to function shows a buyer two things at once: $12,000 a year of profit that is not really there, and a working-capital hole they will have to fund themselves. Reducing overdraft dependence and showing a margin that has actually been restored both raise seller's discretionary earnings and widen the pool of buyers who can get finance. On an owner-operated business that pool is the price.