The New Zealand dollar fell broadly in Asian markets on Wednesday against a basket of major and minor currencies, extending losses for the second consecutive day against its US counterpart and hitting a four-month low. The decline came amid accelerating open-market selling following the release of the Reserve Bank of New Zealand’s monetary policy decision.
The RBNZ cut interest rates by 25 basis points to 3.0%, the lowest level since August 2022, and signaled further easing if inflationary pressures continue to decline in line with its forecasts.
When deciding on the 25-basis-point cut, in line with most market expectations, the RBNZ Board also considered a larger 50-basis-point reduction.
Price Overview
• The New Zealand dollar fell against the US dollar by around 1.25% to 0.5820, its lowest level since April 14, down from the opening price of 0.5893, after recording a high of 0.5899 earlier in the session.
• On Tuesday, the New Zealand dollar ended trading down by about 0.5% against the US dollar, its first loss in three days, as the greenback strengthened against most major and minor currencies.
Reserve Bank of New Zealand
As expected, the RBNZ cut its benchmark interest rate by 25 basis points to 3.00% on Wednesday, the lowest since August 2022. This marked the seventh rate cut since the start of the easing cycle a year ago.
The RBNZ has now lowered rates by a total of 250 basis points since August 2024, citing slowing inflation within its medium-term 2–3% target, weakening economic activity, and a softer labor market.
Today’s decision was approved by a majority of the Monetary Policy Committee, with four members voting for the 25-basis-point cut and two voting for a bolder 50-basis-point reduction.
The central bank said that if inflation continues to decline as expected over the medium term, the committee foresees additional rate cuts.
It also noted both upside and downside risks to the outlook. Cautious behavior by households and businesses could weigh further on growth, while the economy might recover more quickly as the full effects of rate cuts take hold.
New Zealand Interest Rates
• Following the RBNZ meeting, markets priced in more than a 50% chance of a 25-basis-point cut at the October 8 meeting, and above 95% for November.
• Futures markets now suggest New Zealand rates could fall to 2.5% by year-end.
• Stephen Toplis, Head of Research at Bank of New Zealand, said that given the dovish tone of the statement, the bank now expects 25-basis-point cuts in both October and November.
