Economic conditions & trends

New Zealand Central Bank Holds Rates at 3.25%

Published JUL 9 2025

Story

Above: Reserve Bank of New Zealand in Wellington, New Zealand. Image credit: Wikimedia Commons

The Facts

The Reserve Bank of New Zealand held the official cash rate at 3.25% on Wednesday, marking the first pause in its cutting cycle that began in August 2024, with 19 of 27 economists surveyed by Reuters correctly predicting the decision.
Reuters
RNZ
The central bank has reduced rates by 225 basis points since August 2024 but cited near-term inflation risks and global trade uncertainty as reasons for the pause.
Reuters
FXStreet
Current inflation stands at 2.5% within the target band of 1% to 3%, with the RBNZ expecting inflation to reach the top of this range in the second and third quarters of 2025.
Reuters
RNZ
The monetary policy committee indicated further rate cuts remain possible if medium-term inflation pressures continue to ease as projected, with most economists expecting the next reduction in August.
Morning Star
FXStreet
Global trade tensions and potential tariffs were highlighted as key uncertainties affecting the economic outlook, with the RBNZ noting these factors could either increase or decrease medium-term inflation pressures.
Investing
Morning Star
The New Zealand dollar fell 0.3% to $0.5977 following the announcement, while two-year swap rates remained flat at 3.16% as markets pushed back expectations for the next cut until August.
Reuters
FXStreet

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

The Reserve Bank made the right call by hitting a pause on rate cuts. With inflation still sitting at 2.5% and trade wars brewing globally, rushing into more cuts would be reckless. The economy is already recovering with strong export prices, and mortgage holders have gotten plenty of relief from the 225 basis points already slashed.

RNZ

Morning Star

Narrative B

This pause shows the Reserve Bank is being overly cautious when families desperately need relief. The economy remains weak with job losses mounting, especially in construction, and the government isn't doing enough to help with cost of living pressures. More aggressive cuts are needed to support the struggling recovery.

NZ Herald