PANews reported on August 14 that as the economy declined and inflation slowed, the Reserve Bank of New Zealand cut the official cash rate by 0.25 percentage points to 5.25%, starting an easing cycle much earlier than previously expected. The New Zealand dollar/US dollar NZD/USD plunged 50 points in response. The Reserve Bank of New Zealand's new forecast shows that the average OCR will fall to 4.92% in the fourth quarter and 4.36% by the middle of next year. The Reserve Bank of New Zealand said in May that it was considering raising interest rates and would not cut interest rates before the second half of 2025, but this shift to easing policy is a rapid change in the bank's tone. With the New Zealand economy teetering on the edge of recession for the third time in less than two years and unemployment rising, the bank's concerns about high domestic inflation are easing.
