When the Facts Change To cut or not to cut?
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Jul 3, 2025 
Sabrina Delgado, an economist at Kiwibank, dives into the complexities of New Zealand's monetary policy with Bernard Hickey. They discuss the recent uncertainty surrounding the Reserve Bank's interest rate decisions and Kiwibank's call for quicker cuts to mitigate downside risks. Sabrina explains the weak domestic momentum and fragile sectors despite previous rate cuts, along with insights into the housing market's subdued state. They also touch on the dynamics of the Kiwi dollar and the evolving role of the US dollar in the current economic landscape.
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Contentious RBNZ Meeting Raises Uncertainty
- The RBNZ meeting is unusually contentious after a 5-1 dissent and hawkish press comments following May's cut.
- Markets now see real uncertainty about whether the next cut happens or is paused for more data.
Cut Rates Without Mucking Around
- Cut quickly to provide relief rather than pausing and waiting for more data.
- Deliver three 25bp cuts to reach a 2.5% cash rate and support the fragile recovery.
Downside Risks Outweigh Domestic Momentum
- The economy lacks broad momentum and faces significant downside risks domestically and globally.
- External deterioration and trade uncertainty weigh heavily on New Zealand as a small open economy.