MNI RBNZ Review-May 2025: RBNZ Keeping Options Open

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EXECUTIVE SUMMARY: 

• The RBNZ cut rates 25bp to 3.25% following a vote, the first in two years, that included an option to leave rates unchanged. The vote wasn’t unanimous with one dissenter but Governor Hawkesby said that there was consensus around the projections. 
• RBNZ Governor Hawkesby reiterated today that the message at yesterday’s press conference was not to assume that a July rate cut is programmed into the MPC’s thinking.
• The MPC may want to wait and watch trade developments and how Q2 CPI (July 21), Q2 labour market and Q3 inflation expectations data (both August 7) print.
• Markets had fully priced in yesterday’s 25bp cut ahead of the decision, with a total of 64bps of easing expected by November 2025. That has now adjusted to 50bps, inclusive of yesterday’s move.