The Reserve Bank of New Zealand trimmed its official cash rate by 25 bps on 20 August 2025, signalling possible further cuts as economic growth stalls.
The Reserve Bank of New Zealand (RBNZ) cut its official cash rate (OCR) by 25 basis points to 3% on 20 August 2025, the lowest level in three years, citing stalled economic growth and ongoing domestic and global risks.
The central bank indicated that further rate cuts could follow if businesses and consumers remain cautious.
The decision surprised markets, pushing the New Zealand dollar down 1.2% to USD 0.5819 and sending two-year swap rates to 2.93%, their lowest since early 2022. Two of the six members of the RBNZ policy committee had voted for a larger 50-basis-point reduction.
Since August 2024, the RBNZ has reduced rates by a total of 250 basis points to support a fragile economic recovery. Officials said consumption and investment weakened in the second quarter of 2025, partly due to trade policy uncertainty following changes to US tariffs in April.
