International News 20 February 2025
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Bank of New Zealand (RBNZ) cuts interest rate by 50 basis points
The Reserve Bank of New Zealand (RBNZ) has made the decision to reduce its benchmark interest rate by 50 basis points to 3.75%, in an effort to support the weak economic recovery. This decision follows a Reuters poll which predicted that 32 out of 33 economists would make this prediction. Since August of last year, the RBNZ has reduced interest rates by a total of 175 basis points. The central bank has stated that it remains confident that inflation will stay within the target range, allowing for further cuts to the official cash rate (OCR) if economic conditions continue as projected.The RBNZ's latest projections show the benchmark interest rate falling to 3.4% in the second quarter of 2025 and further to 3.1% by the end of that year.
Dollar Strengthens Amid Ukraine Tensions, Markets Await RBNZ Rate Decision
The US dollar strengthened due to concerns over tariffs and ongoing Russia-Ukraine negotiations, while the New Zealand dollar remained stable as the market awaited the interest rate decision from the Central Bank of New Zealand (RBNZ).The RBNZ is expected to cut interest rates by 50 basis points to 3.75% in an effort to boost economic growth and address rising unemployment rates, with economists anticipating a further 50 basis point cut in April. The New Zealand dollar remained unchanged at $0.5703.Additionally, the market is processing US President Donald Trump's latest statement on tariffs, while uncertainty surrounds the Russia-Ukraine peace talks, which did not include Kyiv or European countries.Ukrainian President Volodymyr Zelenskiy has voiced his insistence on involvement in any peace deal, delaying his visit to Saudi Arabia to avoid legitimizing the US-Russia talks.