RBNZ Cuts Rates by 50 Basis Points Amid Falling Inflation: The Reserve Bank of New Zealand (RBNZ) announced
on Wednesday morning, a 50-basis-point interest rate cut,
bringing the official cash rate (OCR) down to 3.75% in an effort to support the economy amid declining inflation.
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In its monetary policy statement, the bank noted that annual inflation remains close to the midpoint of the target range of 1% to 3%,
with expectations of further declines in the coming period.
The RBNZ projected that interest rate cuts would continue,
with the OCR expected to reach 3.45% by June 2025, down from a previous estimate of 3.83%.
Additionally, the rate is forecast to decline to 3.1% by March 2026,
compared to an earlier estimate of 3.43%, and remain at that level until March 2028.
Meanwhile, the annual inflation rate is expected to settle at 2.2% over the same period.
The bank emphasized that further rate cuts are possible in 2025 if economic conditions continue to improve.
It also reaffirmed the monetary committee’s confidence in maintaining rate reductions to support fragile economic activity.
Despite expectations of economic improvement in 2025,
the report highlighted that consumer price inflation could
be volatile in the short term due to a weaker exchange rate and rising fuel prices.
RBNZ Cuts Rates by 50 Basis Points Amid Falling Inflation