The Reserve Bank of New Zealand (RBNZ) has reduced its benchmark interest rate by 25 basis points to 3.5%, aligning with market expectations. This adjustment represents a deceleration from previous reductions of 50 basis points. Commerzbank’s FX analyst, Volkmar Baur, anticipates the potential for further monetary easing. While recent data indicates a modest increase in inflation based on a partial CPI indicator, the RBNZ maintains that inflation remains within its target range of 1-3%, thereby affording the central bank latitude to respond to unforeseen global economic developments. New Zealand’s direct exposure to US tariffs is comparatively limited, with approximately 11% of its exports subject to the 10% base tariff. However, the nation’s significant export reliance on Asia, accounting for 50% of total exports, introduces vulnerability to the broader economic uncertainties stemming from elevated US tariffs in the region.
