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MNI RBNZ Review-February 2025: Slower Easing Pace Now Likely

The RBNZ cut rates by 50bp to 3.75% this week, the third consecutive 50bp move, as was unanimously expected.
New ZealandCentral Bank ReviewCentral Bank ReportsAPACStoryRBNZ - ReviewMarkets

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EXECUTIVE SUMMARY: 

  • The RBNZ cut rates by 50bp to 3.75% this week, the third consecutive 50bp move, as was unanimously expected. This brings cumulative easing this cycle to 175bp. It appears that the MPC is prepared to ease further in 2025, if the economy develops as it expects, but at a slower pace than it has been. 
  • The revised OCR path has an additional 50bp of 2025 easing than in November and Governor Orr confirmed that the MPC is looking to cut 25bp at both its April 9 and May 28 meetings. It is now forecast to end this year at around the mid-point of the 2.5-3.5% range that the RBNZ estimates as neutral, down from just above 3.5% in November.
  • Currently, 27bps of easing is priced for April, with a total of 60bps expected by November 2025.

 

 

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EXECUTIVE SUMMARY: 

  • The RBNZ cut rates by 50bp to 3.75% this week, the third consecutive 50bp move, as was unanimously expected. This brings cumulative easing this cycle to 175bp. It appears that the MPC is prepared to ease further in 2025, if the economy develops as it expects, but at a slower pace than it has been. 
  • The revised OCR path has an additional 50bp of 2025 easing than in November and Governor Orr confirmed that the MPC is looking to cut 25bp at both its April 9 and May 28 meetings. It is now forecast to end this year at around the mid-point of the 2.5-3.5% range that the RBNZ estimates as neutral, down from just above 3.5% in November.
  • Currently, 27bps of easing is priced for April, with a total of 60bps expected by November 2025.