FX.co ★ New Zealand Dollar Falls After RBNZ Rate Decision

The New Zealand dollar declined to approximately $0.597 on Wednesday, marking its lowest level in two weeks, after the Reserve Bank of New Zealand decided to pause its cycle of interest rate cuts. However, the bank indicated that further rate reductions might occur if inflationary pressures diminish. As foreseen, the central bank maintained its official cash rate at 3.25%, a move that follows six successive cuts since August 2024, which was the onset of rate reductions after the last cut in March 2020. The bank has adopted a more cautious approach due to persistent concerns about domestic inflation, currently at 2.5%, and the increasing threat that global trade tensions could exacerbate inflation. Nevertheless, policymakers have stated their intention to continue reducing rates in accordance with their forecasts from May, provided that medium-term inflation moderates. The market expects that continued economic fragility will allow the Reserve Bank of New Zealand the opportunity to implement at least one more rate cut before the year concludes.