As a result, while markets expect 75 basis points of rate cuts by the RBNZ by year-end, the central bank will tread carefully.
Domestic data remains resilient for now
Despite the global jitters, New Zealand’s domestic economy has held up relatively well so far.
Labour market conditions remain soft but stable, and the upcoming pre-budget speech by Finance Minister Nicola Willis is expected to reaffirm the government’s commitment to tight fiscal settings.
However, Tuffley noted “the possibility of a pivot towards growth-friendly policies, such as corporate income tax cuts, could nudge NZ yields higher.”
Outlook: Brace for volatility
In the short term, Kiwibank expects New Zealand’s short-term rates to ease alongside further RBNZ cuts. However, “bouts of volatility are expected throughout 2025” as global trade tensions persist.
