RBNZ moves ahead with easing cycle – UOB Group

The Reserve Bank of New Zealand (RBNZ) decided to cut the official cash rate (OCR) by 25 bps to 5.25%, embarking on an easing cycle much earlier than expected, almost a year ahead of its own projections RBNZ, UOB Group

The RBNZ will continue to steadily reduce the OCR

“The Reserve Bank of New Zealand (RBNZ) cut its official cash rate (OCR) by 25bps to 5.25% earlier today (August 14). The move came as a surprise as it entered a relaxation cycle much earlier than expected.”

“The RBNZ’s updated forecasts show the average OCR at 4.62% at the start of next year and at 3.85% by the end of 2025. Growth forecasts have been revised down significantly, incorporating negative growth in both ​​T224 as well as in T324. The RBNZ now sees inflation falling to 2.3% in the current quarter, but not returning to the 2% midpoint until mid-2026.”

“Given how a faster-than-expected contraction in the economy has shifted the balance of risks, we now expect the RBNZ to continue to steadily cut the OCR by 25 bps at each meeting for the rest of this year to bring the OCR to 4.75 % by the end of the year.”