What changed in the Reserve Bank of New Zealand statement —
Reserve Bank of New Zealand cut policy at 3.00%. Read the official statement and the previous release side by side below.
Decision
- Decision: cut
- OCR: 3.00%
Official statement
Monetary Policy Statement August 2025
We explain the reasons behind our OCR decision and provide an overview of what is happening in the economy.
Monetary Policy Statement August 2025
We've reduced the OCR to 3%
Higher global tariffs and uncertainty could reduce New Zealand’s economic activity and inflation.
Inflation has increased but will decline next year.
Lower interest rates will continue to support economic activity. This will create more jobs over time.
What's happening in the economy?
Higher global tariffs and uncertainty could reduce New Zealand’s economic activity and inflation
The US has increased tariffs on their imports from most countries. US tariffs on New Zealand goods have increased from 10% to 15%. This tariff may hurt our exporters, particularly those who are reliant on the US.
Higher tariffs will reduce global trade and economic activity. Inflation will be higher in the US as their imports will now cost more. However, if the US buys fewer international goods, it could lower prices for other countries including New Zealand.
High uncertainty about tariffs is causing some businesses to delay investment and hiring plans, both in New Zealand and overseas.
Inflation has increased but will decline next year
Tradables inflation has increased. This is mostly due to higher prices for food and things like overseas accommodation and streaming services. We expect tradables inflation to fall next year.
Non-tradables inflation has continued to decline. Insurance, rents, and building costs are increasing at a slower rate. But higher administered prices, such as council rates and vehicle rego fees, are keeping inflation higher.
Inflation is near the top of our 1 to 3% target range. We expect inflation to decrease next year. For example, prices for electricity and dairy are unlikely to continue increasing as much as they have recently.
Lower interest rates will continue to support economic activity. This will create more jobs over time
Economic growth has been uneven across industries. Higher dairy and beef prices are boosting the incomes of farmers. However, industries that sell mainly to New Zealanders, like retail and construction, have been struggling. Unemployment has continued to increase.
Lower interest rates are encouraging households to spend more and businesses to invest. We expect the economic recovery to broaden and businesses to hire more people as demand increases.
Most recent outlook for the OCR
Decision documents
Monetary Policy Statement August 2025 data
Monetary Policy Statement August 2025 briefing pack
Related
Background reading
Cadence's comparison is generated from the official documents. Read the methodology.
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