Overview

• Policymakers cut the Official Cash Rate to 2.5% from 3.0%, the lowest level in more than three years.
• The committee considered a 25bp move but opted for 50bp and kept the option of additional reductions open.
• Markets are now nearly fully pricing another 25bp cut in November to 2.25%, with bond yields and two‑year swaps dropping to fresh lows.
• The New Zealand dollar fell about 0.9% to near $0.5747 after the decision, extending losses that had built ahead of the meeting.
• The move followed an NZIER survey showing weaker activity, lower capacity use at 89.1%, staffing and investment cuts, and a net 11% of firms raising prices, which had split forecasts between 25bp and 50bp.