New Zealand’s central bank delivered a larger-than-expected 50-basis-point rate cut on Wednesday, lowering the official cash rate (OCR) to 2.50% and signalling that further easing may follow to support a sluggish economy.

The bank has now reduced the OCR by a total of 300 basis points since August 2024, taking advantage of inflation sitting comfortably within its 1-3% target band.

The Reserve Bank of New Zealand (RBNZ) said its Monetary Policy Committee reached a consensus to cut rates and remains open to additional reductions “as required for inflation to settle sustainably near the 2% target midpoint.” The decision reflects growing concern that weak demand and rising job insecurity are stalling recovery efforts.

The move surprised most economists — 15 of 26 in a Reuters poll had forecast a smaller 25-bp cut — and prompted a sharp market reaction. The New Zealand dollar fell, two-year swaps dropped.

The RBNZ’s decision suggests policymakers now see inflation pressures fading faster than expected and are prioritising growth risks.

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NZD/USD remains near the bottom of the session range, circa 0.5744