The Reserve Bank of New Zealand duly delivered a 50bp official cash rate cut to 4.25% on Wednesday, as forecast by 27 of 30 economists polled by Reuters, but the Reserve Bank of Australia is unlikely to following its Antipodean neighbour anytime soon.
In a dovish accompanying statement, the RBNZ 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.
The latest move 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.
Across the Tasman Sea, the RBA, in contrast to the RBNZ, Fed, ECB, Bank of England, Bank of Canada and Bank of Korea, has yet to begin its easing cycle with its OCR kept at 4.35% since November 2023.
Sticky underlying inflation and hawkish RBA rhetoric prompted Australia and New Zealand Banking Group on Friday to shift its view on the timing of the first RBA cut from February to May next year.
In its central case HSBC expects two 25bp reductions next year, starting in Q2, but also sees a 25% chance that the RBA will not lower the OCR at all.