PHOTO: New Zealand’s Interest Rate Path Narrows as Inflation Cools and Growth Slows. FILE
📍 WELLINGTON, NZ — The Reserve Bank of New Zealand (RBNZ) is widely expected to hold the official cash rate (OCR) steady at 3.25% on July 9, marking a cautious pause in a dramatic monetary policy cycle that has already delivered 225 basis points of cuts since August.
After steering the economy through recession and taming runaway inflation, the central bank is now in “wait-and-see” mode, with just one more cut likely this year — possibly as soon as August.
Unlock 1.2 Million+ Aussie Business Contacts — No Subscriptions, No Limits
📊 Inflation Drops — But Pressure Isn’t Over Yet
Despite inflation easing to 2.5% in Q1 — now sitting comfortably inside the RBNZ’s 1–3% target range — policymakers remain cautious amid uncertainty about longer-term price stability.
With fresh inflation data due July 21, the RBNZ is holding off on any immediate easing to assess whether price pressures stay under control.
🏦 NZ Banks In Sync: No Change Expected
All major local banks — ANZ, ASB, BNZ, Kiwibank, and Westpac — are aligned in forecasting no movement in the July rate decision. However, many anticipate one final 25bps cut before year-end, with half predicting it could come as early as the August meeting.
🗣️ “The data that has come out since May has been pretty mixed,” said Wesley Tanuvasa, economist at ASB. “So pause now, see the inflation expectation data… we’ve priced in a cut for August.”
📉 Forecasts at a Glance:
| 📅 Date | 💰 OCR (%) | 📈 Inflation (%) | 📉 GDP Growth (%) |
|---|---|---|---|
| July 9, 2025 | 3.25 (Hold) | 2.8 (Q3 est.) | 1.0 (2025 forecast) |
| End of 2025 | 3.00 (Median) | 2.5 (2025 average) | — |
| 2026 | — | 2.1 (Inflation) | 2.4 (GDP forecast) |
🧭 Where to Next for the Kiwi Economy?
With economic growth expected to slow to 1.0% in 2025 (down from a previous 1.2%) and a slight rebound to 2.4% in 2026, the RBNZ is walking a tightrope — trying to support the recovery without reigniting inflation.
The final decision on the next move will come down to the data — particularly the upcoming Q2 CPI release. For now, all eyes are on August.