RBNZ cuts rates to 3.25%, inflation seen easing over time
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The Reserve Bank of New Zealand’s Monetary Policy Committee has lowered the official cash rate by 25 basis points to 3.25%, in line with analyst expectations.
Annual inflation, measured by the consumer price index, rose to 2.5% in the first quarter of 2025. Inflation expectations among businesses and households have also edged higher. However, core inflation is easing, and unused productive capacity remains in the economy—conditions the central bank sees as consistent with inflation returning to the midpoint of its 1–3% target band over the medium term.
New Zealand’s economy is rebounding following a period of contraction, supported by high commodity prices and lower interest rates.Globally, economic growth is expected to slow amid recent international developments. Tariffs and rising political uncertainty abroad are seen as headwinds to New Zealand’s recovery and are likely to dampen medium-term inflation pressures. Still, the outlook remains highly uncertain.
Annual inflation, measured by the consumer price index, rose to 2.5% in the first quarter of 2025. Inflation expectations among businesses and households have also edged higher. However, core inflation is easing, and unused productive capacity remains in the economy—conditions the central bank sees as consistent with inflation returning to the midpoint of its 1–3% target band over the medium term.
New Zealand’s economy is rebounding following a period of contraction, supported by high commodity prices and lower interest rates.Globally, economic growth is expected to slow amid recent international developments. Tariffs and rising political uncertainty abroad are seen as headwinds to New Zealand’s recovery and are likely to dampen medium-term inflation pressures. Still, the outlook remains highly uncertain.