RBNZ keeps interest rate steady at 3.25% as expected
The Reserve Bank of New Zealand (RBNZ) board members decided to maintain the Official Cash Rate (OCR) at 3.25% following the conclusion of the July policy meeting on Wednesday.
The decision aligned with the market expectations.
The RBNZ stood pat on the policy rate after six consecutive cuts.
Summary of the RBNZ Monetary Policy Statement (MPS)
If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the official cash rate further.Annual consumers price inflation will likely increase towards the top of the monetary policy committee's 1 to 3 percent target band over mid-2025.The economic outlook remains highly uncertain.However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2 percent by early 2026.Further data on the speed of New Zealand's economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the official cash rate.Heightened global policy uncertainty and tariffs are expected to reduce global economic growth.This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures.
Minutes of the RBNZ interest rate meeting
Committee expects to lower the official cash rate further, broadly consistent with the projection outlined in May.Case for keeping the OCR on hold at this meeting highlighted the elevated level of uncertainty, and the benefits of waiting until August in light of near-term inflation risks.Committee discussed the options of cutting the OCR by 25 basis points to 3 percent or keeping the OCR on hold at 3.25 percent at this meeting.Global growth is expected to slow over the second half of 2025, reflecting the uncertain consequences of trade protectionism.Some members emphasised that further monetary easing in July would provide a guardrail to ensure the recovery of economic activity.Domestic financial conditions are evolving broadly as expected.Risks to the global outlook remain elevated.Recently announced tariffs could result in higher or lower medium-term inflation pressure for New Zealand than assumed in the central scenario.
NZD/USD reaction to the RBNZ interest rate decision
The New Zealand Dollar shows little to no initial reaction to the RBNZ interest rate decision. TheNZD/USDpair currently trades at 0.6000, up 0.06 on the day.
New Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
This section below was published on July 8 at 21:15 GMT as a preview of the Reserve Bank of New Zealand (RBNZ) interest rate decision.
The Reserve Bank of New Zealand (RBNZ) isexpected to keep the Official Cash Rate (OCR) steady at 3.25%following the conclusion of its July monetary policy meeting on Wednesday.
The decision will be announced at 02:00 GMT. This time, the announcement won’t be accompanied by the Monetary Policy Statement (MPS) and followed by actingRBNZGovernor Christian Hawkesby’s press conference.
Therefore,the language in the policy review will be closely scrutinizedfor fresh cues on the status of the RBNZ’s easing cycle, which could significantly impact the performance of the New Zealand Dollar (NZD).
What to expect from the RBNZ interest rate decision?
TheRBNZ’s May policy statementsignaled thatthe bank is close to the end of its rate-cutting cycle that began in August 2024. The kiwi central bank has cutratesby a total of 225 basis points (bps) since then.
In the statement, the RBNZ said that Inflation is within the target band and the OCR is close to its neutral range between 2%-4%.
The RBNZ also noted that “the full economic effects of cuts in the OCR since August 2024 are yet to be fully realized,” adding that the economic uncertainty remains high due to US tariffs.
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