The Reserve Bank of New Zealand (RBNZ) cut interest rates by 25 basis points to 3.5% at its meeting this morning, Wednesday, April 9, as expected. This is the second time this year, following a 50 basis point cut in February, bringing the total cut to 200 basis points.
This is the fifth cut this cycle. The bank’s interest rate statement stated that annual consumer price inflation is close to the midpoint of the bank’s target range of 1-3%, and that business and core inflation expectations are consistent with inflation remaining within the target level over the medium term.
Recently announced increases in global trade weaken the outlook for global economic activity and pose downside risks to the outlook for economic activity and inflation in New Zealand. This provides more scope for interest rate cuts as necessary, and future decisions will be determined by forecasts of inflationary pressures.
This is the first meeting for interim Governor Christian Hoxby, who opted for caution as some forecasts pointed to a 50 basis point rate cut. Hoxby highlighted the uncertainty surrounding tariffs and suggested the bank was on the right track, suggesting that a 25 basis point cut could be expected in the April and May meetings.
13/04/2025
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