The Monetary Policy Committee of the Reserve Bank of New Zealand decided this Wednesday morning to reduce interest rates by 50 basis points, resulting in an official interest rate of 3.75%. The key points mentioned in the monetary policy statement issued by the Reserve Bank of New Zealand are:
The Reserve Bank of New Zealand has officially cut the interest rate further amid falling inflation. Annual consumer price inflation remains near the midpoint of the Monetary Policy Committee's target range of 1% to 3%. The Reserve Bank of New Zealand has officially reduced the interest rate to 3.75% and expects it to reach 3.45% by June 2025 (compared to 3.83% in the previous statement). The Reserve Bank of New Zealand expects the official interest rate to be 3.1% by March 2026 (down from 3.43% previously). The Reserve Bank of New Zealand anticipates that the interest rate on the New Zealand dollar will be approximately 67.5% by March 2026 (down from 69.5% previously). The Reserve Bank of New Zealand expects the annual consumer price index to be at 2.2% by March 2026 (down from 2.3% previously). The Reserve Bank of New Zealand expects the official interest rate to be 3.1% by June 2026 (down from 3.32% previously). The Reserve Bank of New Zealand anticipates that the official interest rate will be 3.1% by March 2028. We expect further reductions in interest rates as inflation decreases. If economic conditions continue to evolve, there will be room for further reductions in official interest rates in 2025. The committee is confident in continuing to lower rates. Economic activity remains weak. The economy is expected to recover during 2025. The presence of the consumer price index near the midpoint of the target range positions the committee well to respond to future inflation shocks. Consumer price inflation in New Zealand is expected to be volatile in the short term, due to a declining exchange rate and rising gasoline prices.
