RBNZ: Staying measured – Standard Chartered

RBNZ cuts 25bps to 3.50%, in line with February guidance and our expectations. Statement strikes a steady tone: downside risks noted, but no rush to reprice the cycle. We still expect another 25bps cut in May, barring a sharp deterioration in data or global demand, Standard Chartered's economists Bader Al Sarraf and Nicholas Chia note.

Sticking to the script

"The Reserve Bank of New Zealand (RBNZ) delivered a 25bps cut to 3.50% at its 9 April Monetary Policy Review, in line with prior guidance and our expectations. The tone of the statement was noticeably more cautious, with recent increases in global trade barriers now cited as a clear downside risk to both global and domestic activity. That said, the Committee kept its options open, noting it has scope to ease further “as appropriate,” but refrained from pre-committing to the pace. We believe this reflects a preference to calibrate the cycle – not rush it."

"The RBNZ emphasized that the full effects of the prior easing cycle are still feeding through, offering room to proceed cautiously. Importantly, there was no change in the RBNZ’s language around the exchange rate, suggesting no immediate discomfort with NZD levels – even after the recent depreciation brought the currency to its lowest since March 2020 ahead of the decision. NZD-USD initially rose c.25 pips post-decision on the absence of dovish surprises but retraced its gains as broader risk sentiment and trade-related uncertainty remained dominant market drivers."

"We expect a follow-up 25bps cut in May. While global trade tensions pose downside risks, we think the RBNZ will be watching how quickly they feed into domestic data. Put simply, while the risk of a larger move exists, we think the Committee remains more inclined to ease steadily unless the external backdrop deteriorates more sharply."