Reserve Bank of New Zealand monetary policy interest rate cut for May 2025, 25bp as expected.
Takes the cash rate to 3.25%, from 3.5%.
The Bank has cut its path ahead also: RBNZ sees official cash rate at 3.12% in September 2025 (PVS 3.23%)
- Sees official cash rate at 2.87% in June 2026 (PVS 3.1%)
- Sees Twi NZD at around 69.0% in June 2026 (PVS 67.5%)
- Sees annual CPI 1.9% by June 2026 (PVS 2.2%)
- Sees official cash rate at 3.1% in June 2028
- Sees official cash rate at 2.9% in September 2026 (PVS 3.1%)
Statement:
- inflation within target band
- core inflation is declining
- spare capacity in economy
- well placed to respond to domestic and international developments
- both tariffs and policy uncertainties overseas to moderate recovery
- conditions are consistent with inflation returning to the mid-point of the 1 to 3 percent target band over the medium term.
Minutes:
- Inflation is within the target band, and the committee is well placed to respond to both domestic and international developments to maintain price stability over the medium term
- The committee agreed on the projected central path for the OCR
- A 25 basis point decline in the OCR was seen as consistent with medium-term price stability
- Committee discussed the options of keeping the OCR on hold at 3.50 percent or reducing it to 3.25 percent
- Committee noted that the full economic effects of cuts in the OCR since August 2024 are yet to be fully realised.
- In addition to the uncertain scale and duration of tariff policies, it is unclear how these will transmit to the New Zealand economy
- By a majority of 5 votes to 1, the committee agreed to decrease the OCR by 25 basis points from 3.50 percent to 3.25 percent
- Announced increase in US tariffs will lower global demand for New Zealand’s exports
The Reserve Bank of New Zealand is confirming the market outlook that there will be further rate cuts to come. But p[erhaps not as soon as the market was thinking.
The RBNZ OCR cuts so far – note that this graph here, direct from the RBNZ website, does not display today’s cut. As noted in the heading of the screenshot, it’ll be updated at the end of the month:
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Governor Hawkesby will follow up with his press confernence in an hour.
This article was written by Eamonn Sheridan at www.forexlive.com.
