The Reserve Bank of New Zealand (RBNZ) board members decided to maintain the Official Cash Rate (OCR) at 3.25% following the conclusion of the July policy meeting on Wednesday.
The decision aligned with the market expectations.
The RBNZ stood pat on the policy rate after six consecutive cuts.
Summary of the RBNZ Monetary Policy Statement (MPS)
If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the official cash rate further.
Annual consumers price inflation will likely increase towards the top of the monetary policy committee’s 1 to 3 percent target band over mid-2025.
The economic outlook remains highly uncertain.
However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2 percent by early 2026.
Further data on the speed of New Zealand’s economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the official cash rate.
Heightened global policy uncertainty and tariffs are expected to reduce global economic growth.
This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures.
Minutes of the RBNZ interest rate meeting
Committee expects to lower the official cash rate further, broadly consistent with the projection outlined in May.
Case for keeping the OCR on hold at this meeting highlighted the elevated level of uncertainty, and the benefits of waiting until August in light of near-term inflation risks.
Committee discussed the options of cutting the OCR by 25 basis points to 3 percent or keeping the OCR on hold at 3.25 percent at this meeting.
Global growth is expected to slow over the second half of 2025, reflecting the uncertain consequences of trade protectionism.
Some members emphasised that further monetary easing in July would provide a guardrail to ensure the recovery of economic activity.
Domestic financial conditions are evolving broadly as expected.
Risks to the global outlook remain elevated.
Recently announced tariffs could result in higher or lower medium-term inflation pressure for New Zealand than assumed in the central scenario.
NZD/USD reaction to the RBNZ interest rate decision
The New Zealand Dollar shows little to no initial reaction to the RBNZ interest rate decision. The NZD/USD pair currently trades at 0.6000, up 0.06 on the day.
New Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.03% | 0.18% | 0.09% | -0.05% | -0.04% | -0.05% | |
| EUR | -0.03% | 0.01% | 0.14% | 0.06% | -0.04% | -0.09% | 0.04% | |
| GBP | -0.03% | -0.01% | 0.16% | 0.05% | -0.13% | -0.16% | -0.07% | |
| JPY | -0.18% | -0.14% | -0.16% | -0.12% | -0.22% | -0.24% | -0.21% | |
| CAD | -0.09% | -0.06% | -0.05% | 0.12% | -0.08% | -0.13% | -0.02% | |
| AUD | 0.05% | 0.04% | 0.13% | 0.22% | 0.08% | -0.04% | 0.08% | |
| NZD | 0.04% | 0.09% | 0.16% | 0.24% | 0.13% | 0.04% | 0.09% | |
| CHF | 0.05% | -0.04% | 0.07% | 0.21% | 0.02% | -0.08% | -0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
This section below was published on July 8 at 21:15 GMT as a preview of the Reserve Bank of New Zealand (RBNZ) interest rate decision.
- The Reserve Bank of New Zealand is forecast to hold its key interest rate at 3.25% on Wednesday.
- The RBNZ hinted that it is close to the end of the easing cycle as “inflation is within the target band”.
- The New Zealand Dollar could experience a big reaction to the language in the RBNZ policy statement.
The Reserve Bank of New Zealand (RBNZ) is expected to keep the Official Cash Rate (OCR) steady at 3.25% following the conclusion of its July monetary policy meeting on Wednesday.
The decision will be announced at 02:00 GMT. This time, the announcement won’t be accompanied by the Monetary Policy Statement (MPS) and followed by acting RBNZ Governor Christian Hawkesby’s press conference.
Therefore, the language in the policy review will be closely scrutinized for fresh cues on the status of the RBNZ’s easing cycle, which could significantly impact the performance of the New Zealand Dollar (NZD).
What to expect from the RBNZ interest rate decision?
The RBNZ’s May policy statement signaled that the bank is close to the end of its rate-cutting cycle that began in August 2024. The kiwi central bank has cut rates by a total of 225 basis points (bps) since then.
In the statement, the RBNZ said that Inflation is within the target band and the OCR is close to its neutral range between 2%-4%.
The RBNZ also noted that “the full economic effects of cuts in the OCR since August 2024 are yet to be fully realized,” adding that the economic uncertainty remains high due to US tariffs.
Furthermore, New Zealand’s Consumer Price Index (CPI) inflation and Gross Domestic Product (GDP) exceeded expectations in the first quarter (Q1).
The NZ CPI rose 2.5% YoY in Q1, accelerating from the 2.2% increase seen in Q4 2024 and a 2.3% expected growth. Meanwhile, the island nation’s GDP rose 0.8% in the March quarter from the previous three months, faster than forecasts for a 0.7% increase.
Against this backdrop, the RBNZ could prefer to stand pat, awaiting the second-quarter inflation and labor data for fresh economic assessment before the August 19 policy meeting. Industry experts are expecting the next RBNZ rate reduction in August.
How will the RBNZ interest rate decision impact the New Zealand Dollar?
The NZD/USD pair is in a corrective mode from nine-month highs of 0.6121 reached a week ago. The kiwi’s downside is sponsored by the reviving safe-haven appeal of the US Dollar (USD) amid fresh tariff war fears and lingering US fiscal concerns.
The pair could extend its retracement if the RBNZ leaves the door ajar for an additional rate cut this year while acknowledging emerging risks from overseas trade uncertainty.
Conversely, the NZD could resume its uptrend if the RBNZ explicitly signals at the end of its easing cycle amid the improving economic outlook and the broad achievement of its inflation target.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“The Kiwi pair has found support at the critical 50-day Simple Moving Average (SMA) at 0.5988 while the 14-day Relative Strength Index (RSI) looks to reclaim the midline. Buyers need acceptance above the 21-day SMA at 0.6037 for a sustained recovery. Further up, the 0.6100 round level will be tested before buyers take on the 0.6150 psychological barrier.”
“If the 50-day SMA support gives way, a steep drop toward the 100-day SMA at 0.5876 cannot be ruled out. Additional declines will target the 200-day SMA at 0.5848,” Dhwani adds.
RBNZ FAQs
The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.
The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.
Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.
In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.
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