NZDUSD trades between key retracement levels as sellers maintain control | Forexlive

The Reserve Bank of New Zealand (RBNZ) held its Official Cash Rate (OCR) steady at 3.25% last night, in line with market expectations.

The Monetary Policy Committee (MPC) signaled that while annual inflation is likely to edge toward the upper end of the 1–3% target band in mid-2025, it is expected to ease back to around 2% by early 2026 due to waning domestic inflation pressures and spare capacity in the economy.

However, the economic outlook remains highly uncertain with ongoing global trade tensions and newly implemented tariffs anticipated to weigh on global growth, potentially slowing New Zealand’s economic recovery and dampening inflation pressures.

The committee emphasized that the future path of interest rates will be guided by incoming data on inflation persistence, economic momentum, and the evolving impact of tariffs.

Summary of the RBNZ meeting minutes:

• The Committee expects to lower the OCR further, aligning with May’s projections.

• Two policy options were debated: a 25 basis point cut or holding at 3.25%; the latter was chosen due to heightened uncertainty.

• Some members favored an immediate cut to support economic activity amid global slowdown risks.

• The decision to hold was influenced by the desire to reassess in August with more data.

• Global growth is projected to weaken due to trade protectionism.

• Domestic financial conditions are evolving as expected.

• Tariffs introduce uncertainty, potentially pushing medium-term inflation above or below the central forecast.

So the trend is still lower in rates, but the decision was to take a break after moving down from 5.5% to 3.25%.