RBNZ holds rates and signals potential for further easing ✂📣

10:11 am 9 July 2025

  • OCR remains at 3.25%; decision unanimous despite considering a 25 bp cut
  • Inflation path: peak around 3% in mid-2025, declining to ~2% by early 2026
  • Further cuts likely as inflation eases – August meeting will be crucial

The Reserve Bank of New Zealand (RBNZ) kept its Official Cash Rate (OCR) unchanged at 3.25%, ending a streak of six consecutive rate cuts. Policymakers judged that ample domestic spare capacity and weakening global demand will allow inflation to return to the 2% target by early 2026 — even though CPI may hover near the top of the 1–3% target band through mid-2025. Elevated export prices and prior fiscal stimulus are helping support a gradual recovery, though trade war uncertainty and rising long-term global yields weigh on the outlook.

The Monetary Policy Committee debated a 25 bp rate cut but unanimously opted to wait, citing the need for more data on economic activity, inflation, and tariffs. The tone of the statement was dovish: if medium-term inflation pressure continues to ease as projected, further easing is likely, with the next potential decision set for the August 20 Monetary Policy Statement (MPS). Nearly half of outstanding mortgages in New Zealand are due to reset at lower rates in the second half of 2025, which could loosen financial conditions even without an immediate OCR move.

Markets interpreted the decision as a pause before a cut, boosting expectations for rate divergence with Australia. The AUDNZD pair climbed from around 1.086 to 1.089–1.090, reaching a two-week high, as investors priced in a faster easing path from the RBNZ compared to the Reserve Bank of Australia. Diverging monetary policy paths, weak Chinese data, and renewed tariff threats from the U.S. are putting more pressure on the New Zealand dollar (NZD) than the Australian dollar (AUD).

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back

Join over 1 600 000 XTB Group Clients from around the world.