Reserve Bank of New Zealand cuts rate by 25bp, as widely expected

Reserve Bank of New Zealand

• Monetary Policy Committee today agreed to reduce the Official Cash Rate by 50 basis points to 3.75%.
• If economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025

More:

• As extent of tariffs becomes clearer Committee has scope to lower the OCR further
• Global trade barriers weaken outlook for global growth
• Create downside risks for NZ economy
• Having CPI close to middle of band puts Committee in best position to respond to developments

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RBNZ minutes:

• As the extent and effect of tariff policies become clearer, the committee has scope to lower the OCR further as appropriate
• Future policy decisions will be determined by the outlook for inflationary pressure over the medium term
• Committee noted that the preceding cuts to the OCR have yet to have their full effect on the economy
• Monetary policy response to tariffs will focus on the medium-term implications for inflation
• Implications of increased tariffs for global and domestic inflation are more ambiguous
• Substantial spare productive capacity remains in the economy.
• Committee noted that the impact of increased tariffs on global inflation is unclear at this point

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The Reserve Bank of New Zealand has now cut its cash rate by 200bp since it began the cycle back in Auguts last year.

NZD/USD paused on the announcement but is back to rising:

This article was written by Eamonn Sheridan at www.forexlive.com.



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