The Reserve Bank of New Zealand (RBNZ) decided to cut the official cash rate (OCR) by 25 basis points to 5.25%, starting an easing cycle much earlier than expected, almost a year earlier than the bank’s own forecasts.
RBNZ will continue to reduce OCR
“The Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 25 basis points to 5.25% today (August 14). The move came as a surprise as it kicked off an easing cycle much sooner than expected. .”
“Updated RBNZ forecasts have average OCR at 4.62% at the start of next year and 3.85% at the end of 2025. Growth forecasts have been cut significantly, including negative growth in the third quarter of 2024. The RBNZ forecasts inflation to ease to 2.3% in the current quarter. , but won’t return to the mid-2% range until mid-2026.”
“The faster-than-expected economic contraction has shifted the balance of risks, and we now expect the RBNZ to steadily cut the OCR by 25 basis points at each meeting to bring the OCR to 4.75% by the end of the year.”
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