S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
Investing.com-- The Reserve Bank of New Zealand cut interest rates as expected on Wednesday, as policymakers flagged mounting global trade tensions and subdued domestic growth as key risks to the economic outlook.
The RBNZ slashed its official cash rate by 25 basis points to 3.25%, in line with market expectations. The cut is the RBNZ’s sixth rate reduction since it began an easing cycle in mid-2024.
The move comes as annual inflation rose to 2.5% in the March 2025 quarter, within the central bank’s 1–3% target range, but core inflation measures and wage growth continued to soften, indicating easing price pressures.
Projections show inflation peaking at 2.7% later in 2025 before converging near the 2% target midpoint from 2026, bolstering the case for further easing to boost economic growth.
The RBNZ’s revised forecasts suggest the OCR could fall to 2.9% by late 2025, reflecting expectations of persistent economic slack.
The economy is recovering after a contraction, but significant spare capacity remains, the RBNZ said in its May Monetary Policy Statement.
Elevated export prices and lower interest rates are supporting activity, but higher U.S. tariffs and increased global uncertainty are expected to weigh on demand and investment, the central bank said.
"Inflation is within the target band, and the Committee is well placed to respond to domestic and international developments to maintain price stability over the medium term," said RBNZ Governor Christian Hawkesby.
The central bank last reduced rates in April and left the door wide open to further easing ahead, citing the risk of a global trade war.