28.05.202502:28:56UTC+00RBNZ Delivers Another 25bps Rate Cut as Expected

In its meeting in May 2025, the Reserve Bank of New Zealand announced a reduction of its official cash rate (OCR) by 25 basis points, bringing it down to 3.25%. This decision, anticipated by the market, results in borrowing costs reaching their lowest level since August 2022. This recent cut follows a similar 25 basis point decrease the previous month and larger 50 basis point reductions in October, November, and February. According to the central bank's monetary policy statement, inflation remains within the target range of 1%–3%. The annual inflation rate in New Zealand increased to 2.5% in the first quarter of 2025, up from 2.2% in the prior quarter, marking its highest point since the second quarter of 2024. The committee also noted that the country's economy is showing signs of recovery after a period of contraction, bolstered by strong commodity prices and decreased interest rates. Nonetheless, the committee cautioned that emerging trends in the global economy could impact global demand, particularly from Asia, which poses a downside risk to New Zealand's export sector and the domestic growth outlook.