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New Zealand Monetary Policy October 2025

New Zealand: Central Bank cuts rates in October

Latest bank decision: At its meeting on 8 October, the Central Bank decided to cut the Official Cash Rate (OCR) by 50 basis points to 2.50%, taking total rate cuts to 300 basis points since August 2024.

Tepid economy and mild inflation expectations drive cut: The decision was influenced by the tepid domestic economy, with the Bank highlighting flat house prices and weak investment. Moreover, inflation is expected by the Bank to fall back towards the center of the 1.0–3.0% target range early next year.

Further rate cuts on the cards: The Bank suggested it could cut rates further going forward in order to stabilize inflation close to the center of the target range.

Panelist insight: Goldman Sachs analysts said:

“Looking ahead, we see a strong case for unambiguously accommodative policy settings in New Zealand to ensure the above-trend recovery necessary to close a now large negative output gap (at around -1.75% of GDP). We now forecast a deeper RBNZ easing cycle with 25bp OCR cuts in both November and February down to a terminal rate of 2.00% (prior: 25bp cut in Nov to 2.25%).”

ANZ Bank analysts said:

“We are forecasting a follow-up 25bp cut in November taking the OCR to 2.25%, with that to mark the end of the easing cycle. We see risks on both sides of that. If the data continues to disappoint, another 50bp cut is possible. But it’s entirely possible that activity data will start to surprise to the upside from here – the bar for that is low.”

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