FX.co ★ RBNZ Has No Plans to Use Additional Monetary Policy Tools

Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway stated that the central bank does not foresee the need to employ additional monetary policy tools in the near future. He emphasized that it is impractical to assume that either monetary or fiscal policies can counterbalance every economic shock. "Looking to the future, we will enhance our understanding of how additional monetary policy tools impact the economy and reinforce institutional frameworks for better coordination with our fiscal partners," Conway mentioned in a speech delivered in Sydney, as reported by Reuters. Just last week, the RBNZ caught markets off guard by cutting its official cash rate by 50 basis points to 2.5%, marking the lowest borrowing costs since mid-2022. Although inflation remains close to the upper limit of the central bank's 1–3% target range, it is anticipated to return to the 2% midpoint by mid-2026 due to easing pressures from tradable inflation. Recent figures indicated that New Zealand's GDP contracted by 0.9% compared to the previous quarter in Q2 2025 and decreased by 0.6% year-on-year.