NZDUSD reaches 7-week low

• RBNZ cuts interest rates by 50 bps
   
• NZDUSD hits a 7-week low
   
• Future rate changes depend on economic assessments
   
• Inflation slowed to 3.3%, below market expectations

NZDUSD hit a 7-week low after the Reserve Bank of New Zealand decided to cut interest rates by 50 basis points (bps).

The RBNZ also dropped the line from its statement that policy would need to remain restrictive for some time. Instead, future changes would depend on its evolving assessment of the economy, the central bank said.

The 50bps cut was largely expected by the markets, which are now pricing in another easing move of the same magnitude next month (Nov 2024).
 

By the end of 2025, New Zealand's key interest rates could reach 3%.

On the economic side…

In the second quarter of 2024, New Zealand's inflation rate slowed to 3.3%, a decrease from the 4% recorded in the preceding quarter and below the anticipated 3.5% forecast by the market participants.

This downward trend brought the inflation rate to its lowest level since the second quarter of 2021, returning it to within the desired range of 1-3%.

In response, the Reserve Bank implemented a more accommodative monetary policy stance, aiming to balance stable inflation with minimal disruptions to key economic indicators.