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The Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 50 basis points to 3.75% in line with the estimate. The third consecutive rate cut, is the action done to improve the nation's economy, which has contracted in recent times. The RBNZ expects the OCR to be at a median of 3.45% in the second quarter of this year, falling further to 3.14% at year-end, and holding at a constant 3.1% in early 2026.
The central bank expects inflation to remain close to the target rate although it may fluctuate. This is a cautious measure that aims to encourage the struggling New Zealand economy.
Later on, the RBNZ suggests further rate cuts in 2025, provided conditions are as forecast. Economists' forecasts vary, with some anticipating the OCR to fall to 2.75%, while others anticipate just one additional 25 basis point reduction.
