The Reserve Bank of New Zealand (RBNZ) decided to reduce the official cash rate (OCR) by 50 bps to 4.25%. In the accompanying media release, the RBNZ flagged that “annual consumer price inflation has declined and is now close to the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band. Inflation expectations are also close to target and core inflation is converging to the midpoint, UOB Group’s Economist Lee Sue Ann notes.

Committee expects to be able to lower the OCR further early next year

“The Reserve Bank of New Zealand (RBNZ) decided to reduce the official cash rate (OCR) by 50 bps to 4.25% again, as expected. This marks the third straight reduction after the RBNZ began its easing cycle in Aug, lowering rates by 125 bps in little more than three months.”

“In today’s release of the November Monetary Policy Statement, the RBNZ’s new forecasts show the average OCR falling to 3.83% by the middle of next year, suggesting it may move to more gradual rate cuts.”