reuters://realtime/verb=Open/url=cpurl%3A%2F%2Fapps.cp.%2FApps%2Fcb-polls%3FRIC%3DNZINTR%253DECI [reuters://realtime/verb=Open/url=cpurl%3A%2F%2Fapps.cp.%2FApps%2Fcb-polls%3FRIC%3DNZINTR%253DECI] poll data
RBNZ expected to cut rates by 25 bps to 2.25%
Economists predict no further cuts through 2026
By Veronica Dudei Maia Khongwir
BENGALURU, Nov 21 (Reuters) - The Reserve Bank of New Zealand will cut the overnight cash rate by 25 basis points to 2.25% on Wednesday, according to a majority of economists polled by Reuters, who also expect the rate to stay there through next year.
The RBNZ raised rates by 525 bps from October 2021 to September 2023, the most aggressive tightening cycle since launching the cash rate in 1999, to tame inflation. The central bank has since cut rates by 300 bps from August 2024 to fight off slowing economic growth.
rose 3.0% in the third quarter, the top end of the 1-3% target band and the highest since mid-2024. But at 5.3%, the highest since 2016, leaves room for an additional cut.
After unexpectedly cutting by 50 basis points , rather than a smaller 25 bps move, the central bank said it “remains open to further reductions", suggesting to analysts that it has one more cut left to deliver.
Nearly 90% of economists surveyed, 32 of 36, in the November 17–20 poll expected the RBNZ to cut the OCR by 25 bps to 2.25% on November 26, the central bank’s final meeting of the year. Three forecast a hold and one expected a 50 bps cut.
All the major banks - ASB, ANZ, BNZ, Kiwibank and Westpac - expected a 25 bps cut on Wednesday.
"A 25 bps cut looks like a lock," said ANZ chief economist Sharon Zollner. "We don’t expect the RBNZ to cut further next year barring a global shock, but it would be politic to leave the door open to that possibility in order to head off a potential U-turn in monetary conditions over the summer."
The RBNZ has had to cut interest rates much more aggressively than other central banks, such as the and the , which have delivered 75 bps and 150 bps worth of cuts, respectively.
Looking into next year, three-quarters of economists, 24 of 32, predicted no change in RBNZ rates at the next meeting in February, the first policy meeting chaired by , who will take charge as the central bank's first female governor in December.
Of the remaining eight, two expected no move from 2.5%, five predicted a further 25 bps of cuts to 2% and one forecast rates at 1.75%. The median forecast showed no additional cuts next year, marking the end of the RBNZ’s easing cycle.
"The RBNZ will have nearly three months until its next meeting in February to assess the progress of economic recovery. Ideally, it will want to keep its future options wide open, which will also help the new governor's entry into monetary policy decisions be a little smoother," wrote Nick Tuffley, chief economist at ASB.
( from the Reuters global economic poll)
(Reporting by Veronica Dudeimaia Khongwir ; Polling by Vijayalakshmi Srinivasan and Devayani Sathyan; Editing by Hari Kishan, Ross Finley and Alex Richardson)
((VeronicaDudeiMaia.Khongwir@thomsonreuters.com [VeronicaDudeiMaia.Khongwir@thomsonreuters.com]))
