The New Zealand dollar fell after the Reserve Bank of New Zealand's aggressive interest rate cut

The New Zealand dollar fell about 1% to $0.574 on Wednesday, hitting its lowest level since last April, after the Reserve Bank of New Zealand announced a larger-than-expected 50 basis point interest rate cut on Wednesday, lowering the official cash rate to 2.50%, signaling the possibility of further easing to support the slowing economy.

The bank has now cut its official cash rate by a total of 300 basis points since August 2024, taking advantage of inflation remaining within its 1% to 3% target range.

The Reserve Bank of New Zealand (RBNZ) announced that its Monetary Policy Committee reached a consensus on a rate cut, and that it remains open to further cuts as needed to sustain inflation near the 2% midpoint target.

The Reserve Bank of New Zealand's decision indicates that policymakers now see inflation pressures fading faster than expected and are prioritizing growth risks.