MNI BRIEF: RBNZ Cuts OCR 50bp, Points To Future Volatile CPI

MNI (SYDNEY) - The Reserve Bank of New Zealand monetary policy committee cut the official cash rate 50 basis points to 4.25% on Wednesday, noting inflation was expected to remain close to its 1-3% target midpoint. 

The Reserve’s updated forecasts showed a 3.1% terminal OCR by March 2027, slightly later than the December 2026 timeline within its previous Monetary Policy Statement. The Bank also now expects more volatility within its annual inflation outlook, particularly over 2025. However, GDP should grow at 0.3% in Q4, 20 basis points higher than August’s prediction, with 0.6% growth noted across 2025. 

“Geopolitical risks and climate-related energy and food risks pose uncertainty over the medium term," the MPC noted in its statement. "There may be higher relative price volatility and more unpredictability in aggregate inflation. The Committee agreed that having consumer price inflation close to the middle of its target band puts it in the best position to respond to any shocks to inflation." 

The MPC’s decision was largely anticipated. (See MNI RBNZ WATCH: MPC To Consider 75bp Cut, 50bp Most Likely)