The New Zealand dollar rose nearly 1% to around $0.59 on Wednesday, likely due to profit-taking following the Reserve Bank of New Zealand's widely anticipated 50 basis point cut to its policy rate, lowering it to 4.25%.
NZ dollar jumps after RBNZ rate cut
The RBNZ's committee stated that this half-point reduction strikes a balance between supporting economic growth and employment, while also controlling inflation and ensuring market stability. This is the third rate cut by the central bank this year, totaling 125 basis points of easing so far in this cycle.
Additional rate cuts may be considered
The RBNZ also suggested that if economic conditions evolve as expected, additional rate cuts could be considered in early 2025. However, the kiwi remains under pressure from US President-elect Donald Trump’s recent tariff threats, particularly those aimed at China, New Zealand’s largest trading partner.
