Reserve Bank of New Zealand (RBNZ) cuts rates by 0.25% as expected

Reserve Bank of New Zealand (RBNZ) cuts rates by 0.25% as expected

• Reserve Bank of New Zealand cash rate cut by 25 basis points from 3.25% to 3.00%

The RBNZ projects lower OCR levels through 2026, sees inflation returning to target by mid-2026, and highlights spare capacity, stalled growth, and cautious behavior as downside risks.

• RBNZ sees the OCR at 2.71% in December 2025 (previously 2.92%).

• OCR projected at 2.59% in September 2026 (previously 2.9%).

• OCR projected at 2.62% in December 2026 (previously 2.94%).

• OCR projected at 2.85% in September 2028.

• Annual CPI expected at 2.2% by September 2026 (previously 2.1%).

• Trade-weighted NZD seen at 68.0% in September 2026 (previously 69.0%).

• RBNZ said if medium-term inflation pressures continue to ease as expected, there is scope to lower the OCR further.

• Statement noted spare capacity in the economy and declining domestic inflation pressure, with headline inflation expected to return to the 2% midpoint by mid-2026.

• New Zealand’s economic recovery stalled in Q2 of this year.

• The RBNZ highlighted both upside and downside risks to the economic outlook.

• It warned cautious household and business behavior could dampen growth further.

• Alternatively, recovery could accelerate as the effects of rate cuts flow through the economy.