The Reserve Bank of New Zealand cut its Official Cash Rate by 25 basis points to 3.50% on 9 April 2025, taking the benchmark rate to its lowest level since October 2022 and saying it had room to ease further as risks from global tariffs grew.
The decision was announced in the RBNZ's April Monetary Policy Review. The Monetary Policy Committee said economic activity in New Zealand had evolved largely as expected. It also said: "The recently announced increases in global trade barriers weaken the outlook for global economic activity."
TARIFF RISKS SHAPE THE OUTLOOK
The committee signalled that further easing was possible. "As the extent and effect of tariff policies become clearer, the committee has scope to lower the OCR further as appropriate," it said.
The smaller 25-basis-point move followed three consecutive 50-basis-point reductions, in October and November 2024 and in February 2025, the last of which took the OCR to 3.75%. The central bank had signalled in February that it expected to move in smaller steps.
INFLATION WITHIN TARGET
Annual consumer price inflation in New Zealand was 2.2% in the December 2024 quarter, according to Stats NZ, within the RBNZ's target band of 1% to 3%. The RBNZ began its easing cycle in August 2024, when it cut the OCR from 5.50% to 5.25%, its first reduction in more than four years. The April decision brought the cumulative reduction since then to 200 basis points.
Several New Zealand retail banks, including ASB, Kiwibank and Westpac, moved immediately to reduce their floating mortgage rates following the announcement.