Heteronomics Archive

April 09, 2025

RBNZ: 25bp Rate Cut To 3.5% (Consensus 3.5%) in Apr-25

As widely expected, the Monetary Policy Committee reduced the OCR by 25 basis points to 3.5%, citing stable inflation near the midpoint of the target range and significant spare capacity in the domestic economy.
The recent imposition of global trade barriers has increased downside risks to economic activity and inflation, prompting a reassessment of the medium-term inflation outlook.
While global inflation dynamics remain uncertain, the Committee signalled that further rate cuts remain possible, contingent on the evolution of inflationary pressures and external economic developments.

February 19, 2025

The Monetary Policy Committee reduced the OCR by 50 basis points to 3.75%, in line with expectations, citing declining inflationary pressures and significant economic slack, with further cuts likely through 2025.
While near-term inflation may experience volatility due to exchange rate depreciation and higher fuel costs, core inflation and inflation expectations remain well-anchored around the target midpoint.
Global risks, including trade policy uncertainty and geopolitical fragmentation, pose downside risks to growth. Still, the Committee remains confident that maintaining inflation stability will provide flexibility to respond to future shocks.

November 27, 2024

The RBNZ lowered the OCR by 50 basis points to 4.25%, as anticipated, citing confidence in inflation converging towards the 2% midpoint of its target range and subdued economic activity.
Domestic demand remains weak, with excess capacity and soft labour market conditions expected to persist through 2025, providing scope for additional monetary easing early next year.
Geopolitical risks and global economic uncertainty may lead to medium-term inflation volatility, but the current policy framework positions the central bank well to address potential shocks.

October 09, 2024

The RBNZ cut its OCR by 50 basis points to 4.75%, aligning with expectations, driven by the need to support inflation convergence towards the 2% midpoint of its target range.
Subdued domestic economic activity, excess capacity, and weak global growth are critical factors that justify this easing, which seeks to stabilise inflation without triggering instability in output and employment.
Future rate adjustments will depend on evolving data, particularly given external risks like geopolitical tensions and uncertainties in key export markets such as China.