New Zealand Lowers Interest Rate to 3 Percent

(MENAFN) The Reserve Bank of New Zealand (RBNZ) has lowered its Official Cash Rate (OCR) by 25 basis points to 3% in a move aimed at supporting the economy amid rising signs of weakness.

According to the central bank, inflation currently remains near the upper limit of its 1–3% target band but is forecast to ease toward the 2% midpoint by mid-2026. This outlook is driven by declining domestic price pressures and underused economic capacity.

The rate cut comes as New Zealand’s economic recovery lost momentum in the second quarter. The slowdown has been linked to global policy uncertainty, a weakening labor market, rising costs of essentials, and a continued drop in housing prices.

While the bank expects that cautious behavior from consumers and businesses may further constrain growth, it also sees potential for a rebound as lower interest rates begin to take effect.

Future decisions on interest rates will depend on how quickly the economy shows signs of sustained recovery. If inflation continues to soften in the medium term, the RBNZ indicated that further easing could be on the table.

The OCR has now been reduced significantly over the past year, falling from 5.5% to its current level of 3%, in line with efforts to stabilize growth, support employment, and reduce pressure on borrowers.

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