{"id":14835,"date":"2025-08-19T13:32:12","date_gmt":"2025-08-19T13:32:12","guid":{"rendered":"https:\/\/alchemymarkets.com\/?post_type=market_insights&p=14835"},"modified":"2025-08-19T13:32:14","modified_gmt":"2025-08-19T13:32:14","slug":"rbnz-rate-cut-expected-more-easing","status":"publish","type":"market_insights","link":"https:\/\/alchemymarkets.com\/sv\/education\/market-insights\/opening-bell\/rbnz-rate-cut-expected-more-easing\/","title":{"rendered":"Reserve Bank of New Zealand: Rate Cut Expected, More Easing to Follow"},"content":{"rendered":"\n

The Reserve Bank of New Zealand (RBNZ) is poised to deliver another interest rate cut this week, with markets anticipating one more reduction before the end of the year.<\/strong> Despite a subdued growth outlook and a cooling labor market, the central bank is expected to signal that its easing cycle is nearing completion.<\/p>\n\n\n\n

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RBNZ Policy Outlook<\/h2>\n\n\n\n

The RBNZ will meet on 20 August<\/strong> to decide on monetary policy. Following its July meeting, where it left the Official Cash Rate (OCR)<\/strong> unchanged at 3.25%<\/strong>, expectations now point toward a 25 basis point cut to 3.0%<\/strong>.<\/p>\n\n\n\n

This move is largely priced into markets and aligns with the central bank\u2019s own forward guidance. The focus will shift to the Bank\u2019s updated economic projections and forward-looking statements, which may hint at one final cut later this year.<\/p>\n\n\n\n

By November, the OCR could reach 2.75%<\/strong>, marking the likely end of the current easing cycle.<\/p>\n\n\n\n

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Inflation Trends in Line with Projections<\/h2>\n\n\n\n

New Zealand\u2019s headline inflation<\/strong> rose from 2.5% to 2.6%<\/strong> in the second quarter, closely matching the RBNZ\u2019s earlier forecasts.<\/p>\n\n\n\n

More importantly, non-tradable inflation<\/strong>, a key indicator for policymakers, slowed from 4.0% to 3.7%<\/strong>, exactly as expected. The Bank anticipates this figure will decline further to 3.4% by year-end<\/strong>, before falling just under 3.0% by late 2026<\/strong>.<\/p>\n\n\n\n

While service sector inflation has shown some persistence in prior quarters, current projections remain consistent with the view that the OCR will stabilize at 2.75%<\/strong>.<\/p>\n\n\n\n

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Growth Outlook: Still Fragile<\/h2>\n\n\n\n

Economic growth surprised to the upside in the first quarter<\/strong>, with GDP expanding 0.8% quarter-on-quarter<\/strong>, above both market and RBNZ expectations. However, forward-looking indicators such as PMIs and business sentiment surveys<\/strong> point to a more subdued performance in the second quarter.<\/p>\n\n\n\n

Exports remain under pressure, particularly with the 15% reciprocal tariff imposed by the US<\/strong>, affecting goods worth nearly 2% of GDP<\/strong>. Meat and dairy, which represent around 12% of total exports<\/strong>, bear the brunt of these measures.<\/p>\n\n\n\n

For Q2, growth is expected to remain modest, likely in the 0.1\u20130.4% range<\/strong>, keeping attention firmly on inflation and the labor market rather than output strength.<\/p>\n\n\n\n

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Labour Market Weakness Supports Further Easing<\/h2>\n\n\n\n

Despite positive GDP data, the labour market<\/strong> is showing clear signs of cooling:<\/p>\n\n\n\n