Regarding what the Reserve Bank of New Zealand (RBNZ) should do at the upcoming August Monetary Policy Statement, the NZIER Monetary Policy Shadow Board’s view ranged from a 50 basis-point OCR cut to no change. However, the majority recommended a 25 basis-point cut to bring the OCR to 3 percent. This reflects the view that the softness in activity and continued slack in the labour market should provide scope for a modest cut in the OCR now. One member viewed that a 50 basis-point OCR cut now could be necessary to support recovery in the New Zealand economy. However, two members considered that the upward trending in near-term inflation warrants caution by the RBNZ in its OCR setting in August.
Regarding where the OCR should be in a year’s time, members’ picks of the OCR reflected a wide range of views from no further easing to some further easing in monetary policy required beyond August. One member highlighted signs of strong commodity prices and lower interest rates supporting activity and inflation approaching the top of the RBNZ’s 1 to 3 percent inflation target band in the near term. These factors warrant a wait-and-see approach by the RBNZ to assess how the effects of strong export returns and lower interest rates on activity and inflation in the New Zealand economy will unfold. Two members considered that further stimulus is needed beyond August to support the economy.
NZIER’s Monetary Policy Shadow Board is independent of the Reserve Bank of New Zealand. Individuals’ views are their own, not those of their respective organisations. The next Shadow Board release will be Monday 6 October 2025, ahead of the RBNZ’s Monetary Policy Review. Past releases are available from the NZIER website: www.nzier.org.nz.
Shadow Board participants put a percentage preference on each policy action. Combined, the average of these preferences forms a Shadow Board view ahead of each monetary policy decision.
The NZIER Monetary Policy Shadow Board aims to:
• encourage informed debate on each interest rate decision
• help inform how a Board structure might operate
• explore how Board members could use probabilities to express uncertainty.
For further information, please contact:
Ting Huang, Senior Economist
ting.huang@nzier.org.nz , 027 266 0969