Select Language

RBNZ expected to cut interest rates to 2.75% in October

Breaking news

RBNZ expected to cut interest rates to 2.75% in October

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.10.08 05:15
RBNZ expected to cut interest rates to 2.75% in October

update 2025.10.08 05:15

  • The Reserve Bank of New Zealand is expected to deliver another 25 bps cut to the key interest rate on Wednesday.
  • The Monetary Policy Review will be closely scrutinized for fresh cues on the RBNZ's rate outlook.
  • The New Zealand Dollar is set to experience a big reaction to the RBNZ monetary policy announcement.  

The Reserve Bank of New Zealand (RBNZ) is widely expected to cut the Official Cash Rate (OCR) by another 25 basis points (bps) from 3% to 2.75% after concluding its October monetary policy meeting on Wednesday.

The decision will be announced at 01:00 GMT, but will not be accompanied by the Monetary Policy Statement (MPS). There will be no press conference by RBNZ Governor Christian Hawkesby following this meeting.

The New Zealand Dollar (NZD) is set for intense volatility in reaction to the central bank's policy announcements.  

What to expect from the RBNZ interest rate decision?       

The RBNZ is on track to announce a second consecutive 25 bps rate cut in October. However, the swaps market is implying a 30% probability of a bigger 50 bps cut to 2.5%.

RBNZ Governor Christian Hawkesby, during the press conference following the August policy meeting, said that the "OCR projection troughs around 2.5%, consistent with further cuts."

He further noted that the "next two meetings are live, no decisions have been made."

Since then, New Zealand's economic activity has significantly deteriorated. Therefore, a surprise 50 bps rate cut by the central bank this week cannot be ruled out.

However, markets believe that the RBNZ would want to wait for the inflation and employment data before opting for front-loading, as it continues to watch the incoming data.

"One of the key challenges with the RBNZ is its reliance on infrequent data releases. Markets need to wait until 19 October for the crucial third-quarter CPI report, which can steer rate expectations more than any forward guidance at next week's meeting. Third quarter employment data won't be available until 4 November," ING FX Strategist said in his latest research note.

How will the RBNZ interest rate decision impact the New Zealand Dollar?

The NZD/USD pair has paused its recovery just under the 0.5850 barrier heading into the RBNZ event risk. Will the RBNZ trigger a fresh downtrend in the NZD?

That could happen if the central bank lowers borrowing rates by 50 bps or explicitly leaves the door open for a December rate cut by expressing a grim outlook on the economy or any dovish tweaks to the Monetary Policy Review (MPR).

On the other hand, the NZD could see a fresh advance if the central bank hints that it is nearing the end of the rate-cutting cycle.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:

"From a short-term technical perspective, the Kiwi pair remains vulnerable as the 14-day Relative Strength Index (RSI) turns lower below the midline. The pair has failed to surpass the critical 200-day Simple Moving Average (SMA) at 0.5845 on multiple occasions, suggesting that sellers continue to lurk at higher levels."

"Buyers need acceptance above the aforesaid 200-day SMA barrier to initiate a fresh uptrend. Further up, the confluence zone of the 21-day SMA and the 50-day SMA around 0.5875 will act as a tough nut to crack on the way to 0.5900. The 100-day SMA at 0.5947 will be the last line of defense for sellers. Conversely, a sustained break below the September 26 low of 0.5754 will open the door toward the 0.5700 round level. The next downside cap is seen at the 0.5650 psychological barrier," Dhwani adds. 

Economic Indicator

RBNZ Monetary Policy Review

At each of the Reserve Bank of New Zealand (RBNZ) seven meetings, the RBNZ's Monetary Policy Committee (MPC) publishes the Monetary Policy Review (MPR), which gives an interim update on the monetary policy outlook and settings. The review may influence the volatility of the New Zealand Dollar (NZD) and determine a short-term positive or negative trend. A hawkish view is considered bullish for NZD, whereas a dovish view is considered bearish.

Read more.

Next release: Wed Oct 08, 2025 01:00

Frequency: Irregular

Consensus: -

Previous: -

Source: Reserve Bank of New Zealand

The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby's press conference.

RBNZ FAQs

The Reserve Bank of New Zealand (RBNZ) is the country's central bank. Its economic objectives are achieving and maintaining price stability - achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% - and supporting maximum sustainable employment.

The Reserve Bank of New Zealand's (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.

Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ's goal of "maximum sustainable employment" is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. "When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control," the bank says.

In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets - usually government or corporate bonds - from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.


Date

Created

 : 2025.10.08

Update

Last updated

 : 2025.10.08

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

USD/CAD extends losses as weak US Consumer Confidence weighs, BoC and Fed eyed

The Canadian Dollar (CAD) strengthens against the US Dollar (USD) on Tuesday as the Greenback weakens following the latest US Consumer Confidence report. At the time of writing, USD/CAD is trading around 1.3944, extending losses for the second consecutive day and down roughly 0.30%.
New
update2025.10.29 00:32

USD/CHF declines for fourth day as Swiss Franc gains, Fed rate cut expected

USD/CHF trades lower on Tuesday, around 0.7930 at the time of writing, down 0.27% for the day. The pair extends its four-day losing streak as the Swiss Franc (CHF) strengthens amid fading expectations of further monetary easing by the Swiss National Bank (SNB).
New
update2025.10.29 00:13

GBP/USD sinks below 1.33 as UK fiscal woes deepen ahead of budget

The GBP/USD dives more than 0.50% on Tuesday as market participants digested news of the UK's Office for Budget Responsibility (OBR), which plan to cut productivity, leading to a huge hole in the public finances. The pair tumbled below 1.3300 for the first time since mid-October.
New
update2025.10.29 00:07

GBP underperforms versus USD - Scotiabank

Pound Sterling (GBP) is a moderate underperformer on the session so far, falling 0.1% against the US Dollar (USD) at writing after giving up early gains through the upper 1.33s in Asian trade.
New
update2025.10.28 23:24

EUR grinds cautiously higher for fifth day - Scotiabank

The Euro (EUR) is grinding slowly but surely higher, with the support of short-term spreads which are maintaining the recent compression in EZ/US short-term yields, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
New
update2025.10.28 23:23

CAD is little changed on the day - Scotiabank

Spot is little changed.
New
update2025.10.28 23:21

USD mixed to marginally lower - Scotiabank

The US Dollar (USD) is mixed but tracking a little lower overall as the Dollar Index (DXY) continues to drift back from the 99 zone where the index appears to have peaked after its latest run higher, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
New
update2025.10.28 23:19

GBP/JPY slips to one-week low as Yen firms on intervention risk and trade optimism

The British Pound (GBP) fell sharply against the Japanese Yen (JPY) on Tuesday as the Yen strengthened across major peers, recovering from recent weakness tied to Japan's political and fiscal developments.
New
update2025.10.28 23:09

EUR/JPY weakens as Yen rises on US-Japan deal, ECB and BoJ meetings eyed

EUR/JPY weakens on Tuesday, falling 0.50% for the day to around 177.10 at the time of writing, after hitting a multi-year high at 178.23 the previous day, and halting a five-day winning streak.
New
update2025.10.28 22:59

EUR/GBP hits multi-year highs past 0.8760 amid generalised Pound weakness

The Euro accelerated its rally against a weaker British Pound on Tuesday to reach its highest level in two years, and is about to break the November 2023 high at 0.8765 at the time of writing.
New
update2025.10.28 21:45

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel