RBNZ holds rates at 3.25%, signals cut if inflation eases

The Reserve Bank of New Zealand (RBNZ) kept its official cash rate (OCR) unchanged at 3.25%, in line with analysts’ expectations. The central bank stated that annual inflation is likely to rise toward the upper end of its 1–3% target band by mid-2025. However, with unused productive capacity in the economy and weakening domestic inflationary pressures, overall inflation is expected to remain within the band and return to around 2% by early 2026.

High export prices and lower interest rates are currently supporting New Zealand's economic recovery. Nonetheless, heightened global political uncertainty and trade tariffs are expected to weigh on global growth, likely slowing the pace of New Zealand’s recovery and easing inflation pressures.

Economic prospects remain "highly uncertain," the RBNZ said in its post-meeting statement.

If medium-term inflation pressures continue to ease as forecast, the Committee expects to further lower the official cash rate.