Reserve Bank of New Zealand with a third consecutive rate cut. Many expect this to be the last of the cycle.
Indeed, from the RBNZ path ahead outlook:
- sees official cash rate at 2.25% in March 2026 (PVS 2.55%)
- sees official cash rate at 2.28% in December 2026 (PVS 2.62%)
For the statement:
- Annual consumers price inflation increased to 3 percent in the Septemberquarter.
- Future moves in the OCR will depend on how the outlook for medium-term
- However, with spare capacity in the economy, inflation is expected Tofall to around 2 percent by mid-2026.
- Risks to the inflation outlook are balanced
- Economic activity was weak over mid-2025 but is picking up
- Lower interestrates are encouraging household spending, and the labour market is stabilising
- Risks to the inflation outlook are balanced
The Reserve Bank of New Zealand’s latest minutes show policymakers remain focused on how medium-term inflation and overall economic momentum evolve, noting that future moves in the official cash rate will hinge on these factors.
The committee discussed two options at the meeting: holding the OCR at 2.50% or cutting it to 2.25%. While some members argued that rates had already been reduced substantially, others highlighted that a further cut would support consumer and business confidence and guard against the risk of a slower-than-desired recovery.
Those pushing for another reduction pointed to significant excess capacity across the economy and the persistence of spare capacity, suggesting further easing was warranted.
In the end, the committee voted 5–1 to cut the OCR by 25bps to 2.25%, emphasising that monetary policy still needs to work to stabilise demand and keep the inflation outlook on track.
---
Background to this here:
- RBNZ rate cut expected this week, last one in the cycle? End of AUD/NZD bull run in sight
- NZIER Shadow Board majority recommends a 25bp RBNZ OCR cut to 2.25% this week
- NZDUSD Technical Analysis: Last RBNZ rate cut could boost the NZD
- Newsquawk Week Ahead: US Retail Sales, RBNZ, UK Budget, Australian CPI, Tokyo CPI
