New Zealand’s RBNZ set to continue its interest rate easing path as focus shifts to OCR forecast | FXStreet
The Reserve Bank of New Zealand (RBNZ) is expected to cut the Official Cash Rate (OCR) to 2.25% from 2.5%, following the conclusion of the November monetary policy meeting on Wednesday.
The decision will be announced at 01:00 GMT, accompanied by the Monetary Policy Statement (MPS) and followed by RBNZ Governor Christian Hawkesby’s press conference at 02:00 GMT.
The New Zealand Dollar (NZD) will likely experience a big reaction to the central bank’s policy announcements.
What to expect from the RBNZ interest rate decision?
Following a standard 25-basis-point (bps) rate cut in August and a surprise 50-bps move in October, the RBNZ is expected to deliver a hat-trick, with a 25-bps reduction fully baked in for the November monetary policy meeting.
The central bank decided to opt for a big rate cut in its last policy decision in the face of a slowing economy and confidence that inflation was under control.
In its October Monetary Policy Review (MPR), the RBNZ noted that the “committee remains open to further reductions in the OCR as required for inflation to settle sustainably near the 2 percent target midpoint in the medium term.”
Therefore, another rate cut on Wednesday would come as no surprise. Hence, all eyes will be on the discussions among the policymakers on further monetary policy easing heading into 2026.
The revisions to the OCR projection in the first half of next year will also be closely scrutinized to gauge the bank’s path forward on rates.
Since the October 8 meeting, New Zealand’s annual Consumer Price Index (CPI) inflation accelerated in the third quarter (Q3), coming in at 3.0%, in line with the forecasts and at the top end of the central bank’s 1% to 3% target range.
However, the RBNZ made it clear in October that inflation was ticking higher, but noted that spare capacity in the economy should bring it back to 2% by mid-2026, suggesting that policymakers don’t expect inflation to be persistent. On top of that, the annual non-tradeable inflation decreased to 3.5% in Q3, compared with 3.7% in the second quarter.
Additionally, the RBNZ’s monetary conditions survey showed on November 11 that two-year inflation expectations, seen as the time frame when the central bank policy action will filter through to prices, steadied at 2.28% in Q4 2025.
Meanwhile, New Zealand’s Unemployment Rate rose to 5.3% in Q3 from 5.2% in the second quarter, according to the official data released by Statistics New Zealand on November 4. The figure came in line with the market consensus.
Amidst expectations that underlying inflation is largely slowing, another rate cut by the RBNZ is justified.
Economists at Westpac NZ said: “We expect a 25bp cut in the OCR to 2.25%. We see a downward revision in the projected OCR track of around 30-35bp, with a low point in the projection of around 2.20% in the first half of 2026. The implication is a mild and data-dependent easing bias for next year.”
How will the RBNZ interest rate decision impact the New Zealand Dollar?
The NZD/USD pair is miring in seven-month lows as the RBNZ event risk looms. Heightened expectations of a November rate cut have weighed heavily on the NZD since the end of October.
If the central bank downgrades its inflation and/or OCR forecasts while retaining the easing bias, the Kiwi Dollar could extend the current downside.
On the contrary, the NZD could witness a big relief rally should the RBNZ signal the end of the rate-cutting cycle amid an improving economic outlook and receding US tariff fears.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for NZD/USD and explains:
“From a near-term technical perspective, bearish potential remains intact for the Kiwi pair as the 14-day Relative Strength Index (RSI) remains vulnerable well beneath the midline.”
“If sellers flex their muscles on a dovish RBNZ cut, the NZD/USD pair could drop further toward the falling trendline support at 0.5550. Further south, the 0.5500 round level and the April low of 0.5486 could be tested. On the flip side, the pair needs to scale the 21-day Simple Moving Average (SMA) at 0.5663 on a sustained basis for any meaningful recovery. The next relevant topside targets align at the 50-day SMA at 0.5735 and the 0.5800 threshold,” Dhwani adds.
New Zealand Dollar Price Last 7 Days
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies last 7 days. New Zealand Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.47% | 0.20% | 0.69% | 0.47% | 0.53% | 0.96% | 1.52% | |
| EUR | -0.47% | -0.27% | 0.22% | 0.00% | 0.07% | 0.49% | 1.05% | |
| GBP | -0.20% | 0.27% | 0.47% | 0.27% | 0.33% | 0.76% | 1.32% | |
| JPY | -0.69% | -0.22% | -0.47% | -0.21% | -0.14% | 0.27% | 0.84% | |
| CAD | -0.47% | -0.01% | -0.27% | 0.21% | 0.07% | 0.47% | 1.05% | |
| AUD | -0.53% | -0.07% | -0.33% | 0.14% | -0.07% | 0.42% | 0.99% | |
| NZD | -0.96% | -0.49% | -0.76% | -0.27% | -0.47% | -0.42% | 0.56% | |
| CHF | -1.52% | -1.05% | -1.32% | -0.84% | -1.05% | -0.99% | -0.56% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
