The Reserve Bank of New Zealand (RBNZ) held its Official Cash Rate (OCR) steady at 3.25% last night, in line with market expectations.
The Monetary Policy Committee (MPC) signaled that while annual inflation is likely to edge toward the upper end of the 1–3% target band in mid-2025, it is expected to ease back to around 2% by early 2026 due to waning domestic inflation pressures and spare capacity in the economy.
However, the economic outlook remains highly uncertain with ongoing global trade tensions and newly implemented tariffs anticipated to weigh on global growth, potentially slowing New Zealand’s economic recovery and dampening inflation pressures.
The committee emphasized that the future path of interest rates will be guided by incoming data on inflation persistence, economic momentum, and the evolving impact of tariffs.
Summary of the RBNZ meeting minutes:
-
The Committee expects to lower the OCR further, aligning with May’s projections.
-
Two policy options were debated: a 25 basis point cut or holding at 3.25%; the latter was chosen due to heightened uncertainty.
-
Some members favored an immediate cut to support economic activity amid global slowdown risks.
-
The decision to hold was influenced by the desire to reassess in August with more data.
-
Global growth is projected to weaken due to trade protectionism.
-
Domestic financial conditions are evolving as expected.
-
Tariffs introduce uncertainty, potentially pushing medium-term inflation above or below the central forecast.
So the trend is still lower in rates, but the decision was to take a break after moving down from 5.5% to 3.25%.
Price action in the NZDUSD has been choppy following the report, with the pair trading between a session high of 0.60133 and a low of 0.59748. Since then, the price has fluctuated within that range, recently oscillating between 0.60095 and 0.5980.
The high stalled near the 38.2% retracement of the move up from the May low, which comes in at 0.60144—a level that capped gains today. On the downside, the low briefly dipped below the 50% midpoint of the same range, which sits at 0.5982, before rebounding slightly.
Importantly, after the initial drop during the first trading bar on Monday, the price has remained below the 100-bar moving average on the 4-hour chart, reinforcing the bearish tone
