Reserve Bank of New Zealand
- If medium-term inflation pressures continue to ease as projected, thecommittee expects to lower the official cash rate furthe
- Annual consumers price inflation will likely increase towards the top of themonetary Policy Committee’s 1 to 3 percent target band over mid-2025.
- The economic outlook remains highly uncertain
- However, with spare productive capacity in the economy and declining domestic inflationpressures, headline inflation is expected to remain in the band and return toaround 2 percent by early 2026
- Further data on the speed ofNew Zealand’s economic recovery, the persistence of inflation, and the impactsof tariffs will influence the future path of the official cash rate
- Heightened global policy uncertainty Andtariffs are expected to reduce global economic growth
- This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures
RBNZ minutes:
- Committee expects to lower the official cash rate further, broadly consistent with the projection outlined in May
- Case for keeping the OCR on hold at this meeting highlighted the elevated level of uncertainty, and the benefits of waiting until August in light of near-term inflation risks
- Committee discussed the options of cutting the OCR by 25 basis points to 3 percent or keeping the OCR on hold at 3.25 percent at this meeting
- Global growth is expected to slow over the second half of 2025, reflecting the uncertain consequences of trade protectionism
- Some members emphasised that further monetary easing in July would provide a guardrail to ensure the recovery of economic activity
- Domestic financial conditions are evolving broadly as expected.
- Risks to the global outlook remain elevated
- Recently announced tariffs could result in higher or lower medium-term inflation pressure for New Zealand than assumed in the central scenario
There is no press conference after this meeting.
This article was written by Eamonn Sheridan at www.forexlive.com.