ANZ Bank's Chief New Zealand Economist, Sharon Zollner, reports that due to a weak economic recovery, the Reserve Bank of New Zealand (RBNZ) is expected to implement larger cuts to the official cash rate than previously anticipated. The bank now forecasts a 25 basis point cut in both August and October, bringing the policy rate down to 2.5%. This is a revision from the earlier expectation of rate cuts in May and July, which would have lowered the rate to 3%.
While the economic recovery is ongoing, it appears inconsistent compared to current forecasts. Continued global trade uncertainties and a bleak global growth outlook may hinder investment and broader risk appetite. According to Zollner, "The economy requires more support from monetary policy to ensure the recovery stays on track." ANZ now projects GDP growth of 1% in 2025, a downgrade from the previous estimate of 1.3%.
