Central Bank Rate Cuts in India and News Zealand – Currency Thoughts

Central Bank Rate Cuts in India and News Zealand

April 9, 2025

Central bank officials in India and New Zealand, in widely expected moves, cut their key interest rates by 25 basis points today. The Reserve Bank of India‘s unanimously decided repo rate reduction to 6.0% followed a similar cut made at the prior February meeting and a two-year period before that with the rate maintained at a peak of 6.5%. The required reserve ratio was left unchanged today at 4.0%. In the RBI’s released statement announcing today’s decision, officials assert “greater confidence of a durable alignment of headline inflation with the target of 4 per cent over a 12-month horizon” but goes on to acknowledge that “uncertainties remain high in the wake of the recent spurt in global volatility” and to conclude “in such challenging global economic conditions, the benign inflation and moderate growth outlook demands that the MPC continues to support growth” and to “change its policy stance from neutral to accommodative.”

At the Reserve Bank of New Zealand where the Official Cash Rate had peaked at 5.5% from May 2023 until an initial cut last August, officials have now sliced two full percentage points from that very restrictive level. New Zealand consumer price inflation has receded from 7.3% in the second quarter of 2022 to 2.2% in the second half of 2024, and officials are confident that inflation will stay near 2% for the coming year.

With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate. As the extent and effect of tariff policies become clearer, the Committee has scope to lower the OCR further as appropriate.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Reserve Bank of India, Reserve Bank of New Zealand

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on Wednesday, April 9th, 2025 at 7:42 am and is filed under Central Bank Watch.
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