Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said the official cash rate (OCR) of 2.5% is at the lower end of the neutral range, but the MPC remains open to further rate cuts if necessary. RBNZ slashed OCR by 50 bps last week, bringing the total reduction to 300 bps since August 2024. Speaking to Bloomberg TV, as reported by Reuters, he said the decision to cut by 50 bps was “very finely balanced,” given that inflation remains near the top of the RBNZ’s 1% to 3% target band. He noted that spare capacity in the economy gave policymakers confidence that inflation would gradually return to the 2% midpoint over time. Conway also pointed to a recent survey by the NZIER, which showed business sentiment worsened in Q3, saying it had reinforced the RBNZ’s view on the need for supportive monetary policy. While the bank is open to further interest rate cuts, he emphasized that policymakers will wait to assess incoming economic data before making additional decisions.
