Reserve Bank of New Zealand — MPC Decision

Decision (Aug 20, 2025)

• Cut the Official Cash Rate (OCR) by 25 bps to 3.00% — lowest in ~3 years.
• Split vote: 4 members for 25 bp cut, 2 members for 50 bp cut.
• Tone: easing bias continues; RBNZ noted economy has stalled, inflation high but easing scope exists.

Inflation & Outlook

• Headline CPI at top of 1–3% band; expected to edge higher near term (admin/food) before easing.
• Underlying inflation expected to decline toward midpoint over medium term.
• Growth: recovery “stalled” — weak demand, soft labour market, housing slowdown, uneven exports.
• Labour market: weaker, some softness noted though no explicit unemployment forecast in statement.

Analyst / Market Views

• Stance: widely viewed as dovish — cut was expected, signal for more easing clear.
• Path: markets price multiple cuts ahead; some thought a 50 bp cut was already justified.
• NZD: weakened post-decision; front-end yields dropped as markets priced lower OCR track.

Trader Takeaways

• Dovish bias, but still data-dependent.
• Watch: CPI (headline & core/tradables), labour market, housing, global trade demand, food/energy prices.
• Risk balance: upside if inflation expectations rise; downside if demand weakens further.

Next Meeting

• Oct 8, 2025 — expected easing path intact; further cuts possible if disinflation continues.