MNI RBNZ Preview-May 2025: May 25bp Cut, Then?

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EXECUTIVE SUMMARY: 

• The RBNZ decision is announced on May 28 and rates are widely expected to be cut 25bp to 3.25% bringing total easing this cycle to 225bp. 23 out of 24 analysts surveyed by Bloomberg are forecasting this outcome. 
• Given heightened uncertainty, the MPC is likely to retain its easing bias again stating it has “scope” to cut rates further if required and its updated OCR path will be scrutinised to this end. A downward revision bringing the terminal to below 3%, estimated 'neutral', would signal a need for accommodation.
• The attention will be on the medium-term which is likely to show a softer outlook driven by weaker trading-partner growth due to recent global uncertainty. The RBNZ said in April that “on balance, these developments create downward risks to the outlook for economic activity and inflation in New Zealand”. 
• Markets continue to price in 25bps of easing for the May meeting, with a total of 64bps expected by November 2025.