The Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) steady at 3.25% at its July meeting today, ending an aggressive streak of six consecutive cuts since last August.

The pause was widely expected by economists and all major local banks, including ANZ, ASB, BNZ, Kiwibank and Westpac, although opinion is divided over how many more cuts will come later this year.

Financial markets gave less than a 20 percent chance of a rate cut, and about a 60 percent chance of a cut in late August.

After steering the economy through recession and taming inflation the central bank is regarded as being in an information gathering mode while it determines whether food prices will stay under control and not impact core inflation which been falling towards the bank’s 2 percent target point. Fresh inflation data is due on 21 July.

The RBNZ’s Monetary Policy Committee said in a statement today (9 July) that annual consumer price inflation was likely to increase towards the top of the Monetary Policy Committee’s 1 to 3 percent target band over mid-2025.

“However, with spare productive capacity in the economy and declining domestic inflation pressures, headline inflation is expected to remain in the band and return to around 2 percent by early 2026. 

“Elevated export prices and lower interest rates are supporting a recovery in the New Zealand economy. However, heightened global policy uncertainty and tariffs are expected to reduce global economic growth. This will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures. 

“The economic outlook remains highly uncertain. Further data on the speed of New Zealand’s economic recovery, the persistence of inflation, and the impacts of tariffs will influence the future path of the OCR.  If medium-term inflation pressures continue to ease as projected, the Committee expects to lower the OCR further,” the Committee said. 

Raine & Horne New Zealand Supervision and Compliance Manager, James Shepherd said the RBNZ’s decision to hold off on further rate cuts showed it was taking a cautious stance given ongoing inflation pressures and global trade uncertainties. “The property market is still fairly subdued and continues to favour buyers, although we could see modest price growth pick up later this year and into 2026. If the RBNZ does go ahead with more cuts later in the year, that could help support a broader market recovery, but the global outlook remains a key factor to watch,” James said.

Whether you want to buy, sell or rent a property, don’t hesitate to contact your local Raine & Horne office.