New Zealand government bonds lost ground today despite a 50bp cut in the Reserve Bank of New Zealand's official cash rate to 4.25%, as forecast by 27 of 30 economists polled by Reuters.
In a dovish accompanying statement, the monetary policy committee saw further easing early next year, "if economic conditions continue to evolve as projected".
The reserve bank previously cut the OCR by 50bp in October following an initial 25bp reduction, from the 5.5% cyclical peak, in August.
Today's decision follows a slowdown in consumer price inflation in Q3, from Q2's 3.3% annual rate to 2.2% and back within the RBNZ's 1%–3% target range.
The RBNZ, which expects inflation to remain "sustainably" within its target range, forecasts the cash rate at 3.8% in Q2 2025 and 3.6% in Q4 2025, flagging more easing than it had projected in August.
Two-year, five-year and 10-year NZGB yields nevertheless rose 12bp, 11bp and 9bp today to 3.90%, 4.19% and 4.62%.