Commerzbank Sees New Zealand Dollar Under Pressure in Next Months After Central Bank Surprised With 50bps Rate Cut

12:30 PM EDT, 10/08/2025 (MT Newswires) -- The Reserve Bank of New Zealand surprised markets overnight Tuesday with a larger-than-expected cut in its key interest rate, said Commerzbank.

While markets and analysts had primarily anticipated a 25bps cut, the RBNZ went one step further and lowered the cash rate by 50bps to 2.5%, wrote the bank in a note to clients.

In addition, the RBNZ left open the possibility of further key interest rate cuts if necessary. As such, the central bank placed more emphasis on the renewed slowdown in the economy than on the recent slight rise in inflation and also appears to be convinced that the weaker economy will dampen inflation in the near future, stated Commerzbank.

However, the bank doesn't expect the RBNZ to cut interest rates further in the coming months. Inflation has recently proven rather stubborn and is likely to have remained well above the 2% target range in Q3.

In addition, the RBNZ's next meeting at the end of November will be the last for the current chair, Christian Hawkesby, before the new chair, Anna Breman, takes over in December. As a consequence, it seems unlikely to the bank that interest rates will be lowered further in the next two meetings. In fact, this transition may have contributed to this week's larger-than-expected decision.

However, the RBNZ has once again made it clear this week that its focus is currently much more on the weak economy than on the current rise in inflation. This alone is reason enough for the New Zealand dollar (NZ) to be under pressure and could mean that this remains the case in the coming months, according to Commerzbank.

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