RBNZ Governor Adrian Orr reaffirmed that a 50bps rate cut would only happen again in the event of an economic shock, reinforcing the central bank’s guidance for two 25bps cuts in the first half of 2025.
Speaking before a parliamentary committee today, Orr noted that New Zealand is now in an environment of low and stable inflation, though global uncertainty remains a key risk.
He expressed optimism, stating that “GDP growth, employment growth, and low and stable inflation” should support an improving economic environment throughout the year. However, he warned that “geoeconomic fragmentation” is weighing on global growth, leading to increased price volatility in international markets.
RBNZ Chief Economist Paul Conway told the committee that escalating trade tensions will contribute to higher inflation, weaker global growth, and reduced economic efficiency. He stressed that “The best thing we can do is have headline inflation at 2% so that we can sort of absorb that future volatility.”
