The Reserve Bank has kept the Official Cash Rate (OCR) steady for the first time in almost a year, holding at 3.25% amid global economic uncertainty but raising the prospect of more cuts if inflation remains in check.
The central bank was widely tipped to pause the easing cycle that began in August last year – when it cut the base rate from 5.5% – as US President Donald Trump’s tariff policies continue to rattle world markets.
The bank said “heightened global policy uncertainty and tariffs are expected to reduce global economic growth”, impacting New Zealand’s economic recovery.
While inflation is forecast to approach the upper end of the bank’s 1.0-3.0% target band late this year, it said price rises should ease to around 2.0% by mid-2026.
“If medium-term inflation pressures continue to ease as projected, the [Monetary Policy] Committee expects to lower the Official Cash Rate further,” it said.
The bank’s next monetary policy meeting is on August 20.
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