Forex News: NZ Dollar Slides As RBNZ Cuts Rate By

NZ Dollar Slides As RBNZ Cuts Rate By 25 Bps

(RTTNews) - The New Zealand dollar weakened against other major currencies in the Asian session on Wednesday, after the Reserve Bank of New Zealand decided to cut its key interest rate by 25 basis points and signaled further easing.

The Monetary Policy Committee, governed by Christian Hawkesby, voted to lower the Official Cash Rate to 3 percent from 3.25 percent.

The bank said the further data on the speed of New Zealand's economic recovery will influence the future path of the interest rate.

"If medium-term inflation pressures continue to ease as expected, there is scope to lower the OCR further," the bank said in a statement.

Headline inflation is forecast to return to around the 2 percent target midpoint by middle of 2026.

Following the August monetary policy meeting the RBNZ Governor Hawkesby explains at a press conference, "next two meetings are live, no decisions have been made".

"OCR projection troughs around 2.5%, consistent with further cuts", he added.

Traders were looking ahead to the release of the minutes of the US Fed's latest monetary policy meeting in the day and the Jackson Hole Economic Symposium that gets underway on Thursday.

Fed Chair Jerome Powell is scheduled to speak at the symposium on Friday, with remarks potentially impacting the outlook for interest rates.

According to CME Group's FedWatch Tool, there is an 86.9 percent chance the Fed will lower interest rates by a quarter point at its next monetary policy meeting in September.

Stagflation concerns are on the rise and markets are currently looking forward to at least a 25-basis-point rate cut at the September FOMC meeting.

According to Bank of America Global Research (by Reuters), 70 percent of surveyed investors expect a stagflationary environment in the coming months, driven by weaker jobs data, higher core inflation and a sharp rebound in producer prices.

Crude oil prices declined amid supply side concerns as OPEC continues to unwind 2.2 million barrels per day in voluntary cuts by its member nations. West Texas Intermediate crude for September delivery was down $1.07 or 1.69 percent at $62.35 per barrel.

In other economic news, the People's Bank of China maintained its interest rates, as Beijing focus more on fiscal policy easing and targeted measures. The central bank left its one-year loan prime rate at 3.0 percent. Similarly, the five-year LPR, the benchmark for mortgage rates, was retained at 3.50 percent.

The bank had reduced its both LPRs by quarter points in October 2024 and 10 basis points each in May.

In the Asian trading today, the NZ dollar fell to more than 4-month lows of 0.5821 against the U.S. dollar and 1.9986 against the euro, from yesterday's closing quotes of 0.5898 and 1.9741, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.56 against the greenback and 2.00 against the euro.

Against the Australian dollar and the yen, the kiwi slipped to more than a 5-month low of 1.1064 and more than a 2-month low of 85.86 from Tuesday's closing quotes of 1.0944 and 87.12, respectively. The kiwi may test support near 1.11 against the aussie and 84.00 against the yen.

Looking ahead, Eurozone CPI data for July is due to be released at 5:00 am ET in the European session.

In the New York session, U.S. MBA mortgage approvals data, Canada new housing price index for July and U.S. EIA crude oil data are due to be released.

At 2:00 pm ET, U.S. FOMC minutes of its latest monetary policy meeting is set to be published.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2025 RTTNews.com. All Rights Reserved

Market News provided by RTTNews