ING Sees New Zealand's Central Bank Cutting Rates by 25bps Next Week

09:25 AM EDT, 10/02/2025 (MT Newswires) -- ING said it expects the Reserve Bank of New Zealand to cut rates by 25bps to 2.75% next Wednesday, in line with consensus and pricing.

Markets are betting on two more cuts after October, which looks a bit premature, having not yet seen Q3 consumer price index data, wrote the bank in a note.

ING estimates this October move to be followed by a final 25bps cut in November, to a terminal rate of 2.50%.

Investors may not get much more dovish guidance at this October meeting, but if two members dissent again and vote for a 50bps cut, then ING can see some short-term pressure on the New Zealand dollar (NZD).

However, the NZD curve has shifted materially lower of late, now fully embedding three cuts from the current 3.0% OCR, stated the bank. There is a non-negligible risk that the RBNZ will match those market expectations, but data must validate them first.

With easing already well priced into the curve, ING thinks the outlook by year-end for NZD/USD is good, also considering the bank's bearish US dollar (USD) call. The bank is sticking to its 0.60 target.

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