NZD: RBNZ to cut again after 50bp move – ING

The Reserve Bank of New Zealand surprised with a 50bp rate cut today. Furthermore, guidance remained dovish, signalling openness to further reductions, resulting in a 1% drop in NZD/USD, ING's FX analyst Francesco Pesole notes.

RBNZ guidance remains dovish

"We are quite surprised by the decision, as we thought the lack of inflation data for the third quarter would warrant more caution with cuts this month. Instead, it appears that the RBNZ is firmly focused on supporting economic activity, and the larger-than-expected 2Q GDP contraction was enough to trigger an outsized cut."

"We now expect a 25bp cut in November to 2.25% and a good chance of a follow-up reduction to 2.0% in early 2026. We think NZD/USD still has some room to recover on the back of our bearish USD call this quarter, but on the crosses it may keep lagging its closest peer AUD."