Overview
- The Monetary Policy Committee reduced the official cash rate by 50 basis points to 2.50% and said it remains open to further reductions to ensure inflation settles near the 2% midpoint.
- The cut brings the policy rate to its lowest level since 2022 after the committee weighed a smaller 25bp move before opting for a larger step to support a fragile economy.
- Markets reacted swiftly as the New Zealand dollar fell about 0.9% to roughly $0.5745 and two‑year interest rate swaps declined, with traders pricing in additional easing.
- Economists were split before the meeting, with a Reuters poll showing most expected a 25bp cut while a substantial minority anticipated 50bp.
- Latest surveys showed weaker business confidence, softer capacity use, and a net rise in firms lifting prices, prompting analysts to warn that expectations for further cuts hinge on the upcoming Q3 CPI data.