PHOTO: Kiwibank’s economic team has delivered one of their strongest critiques yet. FILE
💥 The Big Warning: “The Delay Has Cost Us”
New Zealand’s economic recovery has hit a wall — and according to leading economists, the blame sits squarely with the glacial pace of the Reserve Bank’s rate cuts.
Kiwibank’s economic team has delivered one of their strongest critiques yet, arguing that the RBNZ acted “too little, too late”, leaving households and businesses struggling while the recovery they forecast for 2025 “stalled”.
They argue they had long pushed for the OCR to be slashed to 2.5% much earlier, and while the rate now sits at that level, the long delay meant Kiwis endured unnecessary financial pain.
“The recovery we anticipated for this year stalled, activity lost momentum, and Kiwi households and businesses have suffered further.”
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🏦 OCR Cuts: Why Economists Say RBNZ Dropped the Ball
The economists say the RBNZ left the cash rate at restrictive levels for too long — keeping the economy stuck even while signs of recession were obvious.
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NZ has endured 300bp of easing, but
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Most of the year was still spent in tightening territory
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Stimulatory policy only arrived after October’s cut to 2.5%
According to their analysis, the RBNZ is now having to “mop up the mess” caused by delayed action.
📉 What’s Next: A 25bp Cut… or a Shock 50bp?
Markets are fully pricing in a 25bp cut to 2.25%, but the economists say a 50bp slash should be seriously considered.
Why a 50bp cut is now on the table:
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It would bring the OCR to 2.0% immediately
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It would “clear the decks” for incoming Governor Dr Anna Breman
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It avoids waiting months for the February decision
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It could accelerate momentum in a fragile economy
“Why not? Indeed… A surprise 50bp move is entirely within the realms of possibility.”
And if it overstimulates? The economists say simple — hike a little earlier. NZ needs growth first.
🔮 Fresh Forecasts: What Markets Should Expect
Beyond the cut itself, the upcoming Monetary Policy Statement will be crucial.
Economists expect:
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A lower terminal OCR
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A clear signal that more easing is possible
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A refreshed track that sets the tone for the remainder of the year
The RBNZ has already eased more than previously signalled — meaning the forecast path must shift downward.
🌱 Economic Recovery: Green Shoots, but Fragile
Kiwibank’s team says the recovery is happening — but barely.
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“Green shoots are emerging”
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But they’re “few and far between”
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A 2.25% OCR might be enough
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But more cuts could still be required
“We hope a 2.25% cash rate will be enough… but we may need more.”
With households stretched, business confidence soft, and growth patchy across regions, economists warn the country is navigating one of its most delicate economic phases in years.