The New Zealand dollar rose after the expected decision of the Reserve Bank of New Zealand
As expected, the Reserve Bank of New Zealand cut the official interest rate by 25 basis points to 3.25% for the sixth consecutive time, with inflation remaining within the target range.
The minutes of the bank's meeting were as follows:
- By 5 votes to one, the committee approved the reduction of the official interest rate by 25 basis points from 3.50% to 3.25%.
- Inflation is within the target range.
- Core inflation is falling.
- The reserve energy in the economy is well positioned to respond to domestic and international developments.
- Both tariffs and political uncertainty abroad are expected to lead to a moderate recovery.
- The announced increase in US tariffs will lead to a decrease in global demand for New Zealand exports.
- The Reserve Bank of New Zealand confirms market expectations for further interest rate cuts, but perhaps not as quickly as the market expected.
- The possibility of further cuts to support the economic recovery clouded by US tariffs.
- The Reserve Bank of New Zealand now expects the cash rate to fall to 2.92% in the fourth quarter of 2025, and to 2.85% in the first quarter of 2026.
The press conference of the governor of the Reserve Bank of New Zealand Hawkesby was as follows:
- The decision to hold a vote on interest rates was a positive indicator, not uncommon at turning points.
- A consensus forecast on the cash interest rate has been reached, but there is a high degree of uncertainty.
- The central forecast is wide enough that there is no bias in any direction regarding the next steps at the next meeting.
- Interest rates are in the neutral zone.
- Being close to neutrality, it's more about feeling your way around politics now.
- The main message is that we have come a long way, we were not pre-programmed about the moves now.
- The members of the committee were comfortable with the forecasts of interest rates, with a difference in timing.
