WELLINGTON, May 28 (Xinhua) -- New Zealand's central bank has cut the Official Cash Rate (OCR) by 25 basis points to 3.25 percent, as the economy recovers from recent contraction.
Annual inflation rose to 2.5 percent in the first quarter of 2025, and inflation expectations among households and businesses have also edged higher. However, core inflation is easing, and spare capacity in the economy suggests inflation will return to the 1-3 percent target range over time, the Reserve Bank of New Zealand (RBNZ) said in a statement on Wednesday.
The economic recovery is being supported by high commodity prices and lower interest rates. But global risks, such as rising tariffs and policy uncertainty, are expected to slow global growth, potentially weighing on New Zealand's medium-term outlook, it said.
Despite the mixed signals, the RBNZ Monetary Policy Committee said inflation remains within its target band and that it remains ready to adjust policy as needed to support price stability.
Economists widely anticipated the rate cut, citing a sluggish economy due to ongoing uncertainty from U.S. tariff policies and cautious spending and investment by households and businesses, according to a Radio New Zealand report. ■