The Reserve Bank of New Zealand will cut interest rates by 25 basis points on April 9, according to economists polled by Reuters, who have held to their previous rate outlook as inflation is expected to remain under control.
Following its most aggressive tightening cycle, the central bank has cut rates by a cumulative 175 basis points since August last year, supporting an economy that has finally emerged from recession, growing 0.7% in the last quarter of 2024.
All 31 economists in the March 31-April 3 poll expected the central bank to cut its official cash rate (NZINTR=ECI) for a fifth consecutive meeting by 25 basis points to 3.50% on Wednesday.
That included all of the country's largest banks: ANZ, ASB, BNZ, Kiwibank, and Westpac.
"It would take quite a lot to cause the Reserve Bank to diverge from their stated plan, given they think the neutral rate is 3.00%. We're still above that level, and while the economy is strengthening, it's crawling out of a hole," said Sharon Zollner, chief economist at ANZ.
"I would describe a cut next week as a near certainty, a follow-up cut in May as highly likely and a third cut in July as more of a coin toss."
Nearly 90% of the economists, 24 of 27, expect another 25-basis-point cut in May. The median forecast indicated an additional 25-basis-point cut in the third quarter, which would bring the interest rate to 3.00% by end-September.
Among those with a year-end forecast, 16 of 26 respondents expected the policy rate to be at 3.00% or lower. Ten predicted rates at 3.25%, two said 2.75% and two others 2.50%.
A reduction to 3% would mean the RBNZ is set to cut rates by a total of 250 basis points, a comparatively dovish stance when measured against the Reserve Bank of Australia and the U.S. Federal Reserve.
(Other stories from the April Reuters global economic poll)
