NZD steady as RBNZ holds OCR at 3.25% - BBH

NZD/USD is range-bound around 0.6000. RBNZ delivers a dovish hold. The RBNZ kept the Official Cash Rate (OCR) unchanged at 3.25%, as was largely anticipated, and noted that 'If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the Official Cash Rate further.' The guidance is in line with the RBNZ projection outlined in May which sees the OCR bottom at 2.85% over Q1 2026, BBH FX analysts report.

Dovish guidance keeps Kiwi range-bound

"The RBNZ Committee discussed two options at today's meeting: cutting the OCR by 25bps or keeping the OCR on hold. According to the RBNZ "The case for lowering the OCR at this meeting highlighted weak near-term growth momentum and the risk of prolonged weakness in economic activity from excess caution by households and businesses in the face of economic uncertainty."

"The case for keeping the OCR on hold at this meeting highlighted the elevated level of uncertainty, and the benefits of waiting until August in light of near-term inflation risks." The swaps markets price-in 68% odds of a 25bps cut at the August 20 meeting, little changed to the pricing observed ahead of today's meeting."

"In our view, the RBNZ is near the end of its easing cycle, which is supportive of NZD. New Zealand inflation is within the target band and the OCR is close to the RBNZ mid-point estimate of the neutral range between 2% and 4%."