New Zealand: RBNZ cuts OCR by 50 bps – UOB Group

The Reserve Bank of New Zealand (RBNZ) decided to reduce the official cash rate (OCR) by 50 bps to 4.75%. In the accompanying media release, the RBNZ flagged that the ‘Committee agreed that it is appropriate to cut the OCR by 50 basis points to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate’, UOB Group economist Lee Sue Ann notes.

RBNZ decides to reduce the official cash rate

“The Reserve Bank of New Zealand (RBNZ) slashed its official cash rate (OCR) from 5.25% to 4.75% earlier today, marking its second straight reduction since it unexpectedly cut in August. The RBNZ said then, that the pace of further easing will depend on how confident it is about a low inflation environment.”

“We had already anticipated the RBNZ to continue easing. However, we were looking for a 25bps cut today, with the view that the RBNZ will not have received 3Q24 data on growth, inflation nor employment since the 25 bps cut in August.”

“Our current view is for a further 175 bps of rate cuts to a terminal rate close to 3.00% by this time next year. And we are keeping to our view of a 25 bps cut at the next monetary policy meeting on 27 Nov. However, we will be relooking at our forecasts following the release of 3Q24 CPI data on 16 October.”