New Zealand central bank sees less growth, FOMC says it will remain cautious, Trump tariffs upended

The New Zealand dollar declined as much as 0.67% earlier but has recovered. In the European session, NZDS/USD is trading at 0.5969, up 0.04% on the day.

RBNZ's Hawkesby sees weaker growth, lower inflation

A day after the Reserve Bank of New Zealand lowered interest rates, Governor Christian Hawkesby testified before a parliamentary committee on Thursday. Hawkesby said the central bank could hold rates in July and that rate decisions would be data-dependent. The Governor said he expected slower global growth would dampen New Zealand's recovery and there was uncertainty around the impact of the US tariffs.

The RBNZ has been aggressive, chopping 225 basis points in the current easing cycle, which has brought the cash rate down to 3.25%, its lowest level in almost three years. At yesterday's meeting, the RBNZ said that the cash rate was currently in a neutral zone, where it neither stimulates nor curbs economic growth.

FOMC minutes: Increasing uncertainly could mean "difficult tradeoffs"

In the FOMC minutes of the May 7 meeting, members expressed concern about the government's fiscal and trade policy. Members said that "uncertainty about the economic outlook had increased further", making it appropriate to remain cautious until these policies became clearer. Members warned that if inflation remained high and growth and employment weakened, the Fed might have to make "difficult tradeoffs".

There was another twist to the Trump tariffs saga, as the US Court of International Trade declared the tariffs illegal. The Court ruled that Trump had exceeded his authority by imposing wide-sweeping tariffs against US trading partners. The decision puts a hold on the tariffs, but that may not last long as the US Justice Department has filed an appeal.

NZD/USD technical

• NZD/USD has pushed below support at 0.5954 and 0.5937. Below, there is support at 0.5914.

• There is resistance at 0.5977 and 0.5994.

NZDUSD 4-Hour Chart, May 29, 2025