MNI RBNZ Review-October 2025: More Stimulus Likely Needed

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EXECUTIVE SUMMARY: 

• All members agreed that the 50bp to 2.5% was appropriate given material spare capacity in the economy. As this negative output gap is likely to persist for some time and the economic recovery remains lacklustre, further cuts bringing policy into stimulatory territory are likely. 
• The meeting record stated that the Committee remains open to further reductions in the OCR” – note the plural in “reductions”.  Thus, with the recovery lacklustre in Q3 and unlikely to surprise in Q4, another rate cut in November seems likely.
• How the economy develops before the next meeting in February will determine if more stimulus is needed but it will also be the first decision with new Governor Breman at the helm.
• RBNZ dated OIS pricing are 9-12bps softer across meetings softer than yesterday’s pre-RBNZ levels. 34bps of easing had been priced for yesterday’s meeting. A cumulative 62bps of easing had been priced by November 2025 versus 74bps now (including yesterday’s move).