Media release
The Monetary Policy Committee today voted to lower the OCR by 25 basis points to 3.25 percent.
Annual consumers price index inflation increased to 2.5 percent in the first quarter of 2025. Inflation expectations across firms and households have also risen. However, core inflation is declining and there is spare productive capacity in the economy. These conditions are consistent with inflation returning to the mid-point of the 1 to 3 percent target band over the medium term.
The New Zealand economy is recovering after a period of contraction. High commodity prices and lower interest rates are supporting overall economic activity.
Recent developments in the international economy are expected to reduce global economic growth. Both tariffs and increased policy uncertainty overseas are expected to moderate New Zealand's economic recovery and reduce medium-term inflation pressures. However, there remains considerable uncertainty around these judgements.
Inflation is within the target band, and the Committee is well placed to respond to domestic and international developments to maintain price stability over the medium term.
