RBNZ cuts cash rate by 50bp vs. 50bp expected

Reserve Bank of New Zealand monetary policy interest rate cut for February 2025

Statement highlights, Headlines via Reuters:

• OCR 3.75% – OCR reduced further as inflation abates

• Annual consumer price inflation remains near the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band

• New Zealand’s Reserve Bank reduced OCR to 3.75%

• RBNZ sees official cash rate at 3.45% in June 2025 (previously 3.83%)

• RBNZ sees official cash rate at 3.1% in March 2026 (previously 3.43%)

• RBNZ sees TWI NZD at around 67.5% in March 2026 (previously 69.5%)

• RBNZ sees annual CPI at 2.2% by March 2026 (previously 2.3%)

• RBNZ sees official cash rate at 3.1% in June 2026 (previously 3.32%)

• RBNZ sees official cash rate at 3.1% in March 2028

• RBNZ: Rates reduced further as inflation abates

• RBNZ: If economic conditions continue to evolve, scope to lower OCR further in 2025

• RBNZ: Committee has confidence to continue to lower rates

• RBNZ: Economic activity remains subdued

• RBNZ: Economy expected to recover over 2025

• RBNZ: Having CPI close to middle of target band puts committee in best position to respond to future inflationary shocks

• RBNZ: Consumer price inflation in New Zealand is expected to be volatile in the near term, due to a lower exchange rate and higher petrol prices

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And from the minutes to the meeting, that the bak release at the same time as the Statement:

• RBNZ Minutes: If economic conditions continue to evolve as projected, the committee has scope to lower the OCR further through 2025.
• RBNZ Minutes: Expectations of future inflation, the pricing intentions of firms, and the degree of spare productive capacity are consistent with the CPI inflation target being sustainably achieved.
• RBNZ Minutes: There is a risk of increased trade barriers and broader geoeconomic fragmentation.
• RBNZ Minutes: This provides the context and the confidence for the committee to continue lowering the OCR, and at a faster pace than projected in November.
• RBNZ Minutes: An increase in trade restrictions is likely to reduce economic activity in New Zealand.
• RBNZ Minutes: Timely indicators of economic activity, including a range of business surveys, have improved in recent months.
• RBNZ Minutes: While lower interest rates are expected to underpin a recovery in the domestic economy, the speed and timing of the recovery is uncertain.
• RBNZ Minutes: There is significant spare capacity in the economy, and slightly more than we had assumed in November.

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Background on this is here:

• Reserve Bank of New Zealand expected to cut official cash rate (OCR) target by 50bp today,

• NZIER RBNZ Shadow Board recommends OCR cut by 50bp on February 19
• Newsquawk Week Ahead: RBA, RBNZ, FOMC Minutes, PMIs, Canada, UK and Japan inflation
• Reserve Bank of New Zealand (RBNZ) expected to cut reduce interest rates by 50bp on Feb 19
• New Zealand inflation expectations remained subdued in Q1 2025
• Reserve Bank of New Zealand inflation expectations: 1yr 2.15% (prior 2.05) 2yr 2.06 (2.12)
• Reserve Bank of New Zealand preview – likely the final 50bp interest rate cut
• ANZ says NZ jobs data don’t stand in the way of RBNZ 50bp cut at meeting on 19 February

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