N. Zealand unexpectedly cuts OCR to 5.25

The Reserve Bank of New Zealand (RBNZ) surprised markets on Wednesday by cutting its official cash rate (OCR) by 25 basis points to 5.25 per cent, according to its statement.

New Zealand’s annual consumer price inflation is approaching the Monetary Policy Committee’s target range of 1 to 3 per cent.

Inflation expectations, firms’ pricing behaviour, headline inflation, and various core inflation measures are all indicating a trend towards low and stable inflation.

The kiwi dollar tumbled one per cent to $0.6015 following the announcement, erasing earlier gains, according to Reuters.

Annual growth among New Zealand’s key trading partners was 2.9 per cent in the March 2024 quarter, slightly lower than the 3.0 per cent in the December 2023 quarter.

GDP growth for key trading partners is forecasted to be 2.8 per cent in 2024, with a slight increase expected in 2025.

Attribution: The Reserve Bank of New Zealand statement, Reuters

Subediting: M. S. Salama