RBNZ delivered a 25bps cut to the Official Cash Rate, lowering it to 3.00% as widely expected. A more sizeable 50bps rate cut was discussed during the meeting. Policymakers maintained an easing bias, noting that “if medium-term inflation pressures continue to ease as expected, there is scope to lower the OCR further.”
The new projections point to the OCR dropping to 2.7% by Q4 2025, then settling between 2.5% and 2.6% in 2026 before edging back toward 2.7–2.8% in 2027. This outlook effectively signals room for one additional cut this year and another in early 2026.
The Bank highlighted ongoing slack in the economy and easing domestic inflation, projecting headline inflation to return to the 2% midpoint of target by mid-2026. However, New Zealand’s recovery has stalled, with household and business spending constrained by global policy uncertainty, weaker employment, higher costs for essentials, and falling house prices.
NZD/USD dives through 0.5855 support after the announcement to resume the decline from 0.6119. Next target is 50% retracement of 0.5484 to 0.6119 at 0.5802. As the decline is currently seen as a corrective move, there might be some support form 0.5802 to bring rebound. However, firm break of 0.5906 support turned resistance is needed to indicate short term bottoming. Otherwise, risk will stay on the downside in case of recovery.
Also, decisive break of 0.5802, coupled with downside acceleration through the near term falling channel, will suggest that NZD/USD is indeed reversing the whole rise from 0.5484. That could pave the way through 61.8% retracement of 0.5727 to wards 0.5484 low.
