RBNZ Likely to Cut OCR to 2.25% in November

Overview: What to expect from the RBNZ meeting in November 2025

The Reserve Bank of New Zealand (RBNZ) is widely anticipated to announce a 25 basis‑point reduction in the Official Cash Rate (OCR) at its November 2025 policy meeting, lowering the rate to 2.25% from 2.50%. The decision will be published alongside the Monetary Policy Statement (MPS), followed by Governor Christian Hawkesby’s press conference. Market participants expect heightened volatility in the New Zealand dollar (NZD) and broader risk assets around the release.

Recent policy moves and the path to November

Throughout 2025 the RBNZ has signalled a gradual easing bias after a period of restrictive policy aimed at reining in inflation. The bank delivered a 25 bp cut in August and followed with a larger 50 bp move in October. A further 25 bp reduction in November would be consistent with the committee’s communication that it remains prepared to reduce the OCR as needed to return inflation sustainably toward the 2% midpoint of its target range.

Key drivers behind the expected cut

• Inflation dynamics: Headline CPI has moderated in recent quarters but remained elevated relative to the 2% objective. Q3 2025 annual CPI landed around 3.0%, placing inflation at the top of the RBNZ’s 1–3% target range.
• Spare capacity: Labour market indicators and measures of economic slack suggest the economy is moving toward a looser stance, supporting a lower neutral rate.
• Inflation expectations: Two‑year inflation expectations have hovered near 2.3% in late 2025, indicating the public and markets expect inflation to converge toward target over the medium term.
• Global context: Easing cycles among other advanced‑economy central banks and a shifting global growth outlook have relieved pressure on the RBNZ to keep policy as restrictive as earlier in the year.

Data focus ahead of the announcement

Market participants will be closely watching both the MPS and Governor Hawkesby’s remarks for guidance on the committee’s view of the economic outlook and the likely trajectory of the OCR through 2026.

Areas of particular attention include:

• Revisions to the OCR projection path in the MPS, especially the expected low point and timing of the trough in 2026.
• Assessment of domestic demand and labour market slack, including unemployment and wage growth trends.
• Inflationary pressures across tradable and non‑tradable components of CPI.
• Balance of risks: whether the RBNZ highlights upside risks (e.g., faster‑than‑expected wage growth or commodity‑driven price pressures) or downside risks to inflation and growth.

Recent New Zealand macro updates

New Zealand’s inflation profile in 2025 has been mixed. Annual CPI recorded 3.0% in Q3 — in line with forecasts but still elevated. Non‑tradable inflation, which responds more strongly to domestic demand, eased marginally quarter‑on‑quarter, suggesting some cooling in pressure from services and housing‑related costs.

On the labour front, unemployment edged up to around 5.3% in Q3 2025, signaling a modest softening in the labour market after a prolonged period of tight conditions. Wage growth has slowed from the peaks seen in 2023–2024, which has supported the case for a moderate easing cycle.

How markets are pricing the RBNZ decision

Financial markets have largely priced a 25 bp cut for the November meeting as a baseline scenario. Traders and analysts will parse the following for implications beyond the immediate announcement:

• Whether the RBNZ signals a continued series of cuts into 2026 or frames the November move as close to the end of the easing cycle.
• Any change in language around inflation persistence or the trade‑offs facing the committee.
• Updates to the path of the OCR that could shift expectations for global short‑term rates and cross‑currency spreads.

Implications for the New Zealand dollar and FX markets

The NZD has traded under pressure since late October as the market increased the odds of additional easing. A downward revision to the OCR projection or an explicit signal that more cuts are likely would likely exert further downside pressure on the NZD against major currencies.

Conversely, if the RBNZ signals that November is near the end of the easing cycle — or if Governor Hawkesby emphasizes upside risks to inflation — the NZD could rally sharply on a relief‑rally technical unwind and repositioning by FX market participants.

Short‑term trading considerations

• Expect elevated intraday volatility during the MPS release and the subsequent press conference.
• Stop‑loss placement and position sizing are key as headlines and Governor commentary can trigger abrupt moves.
• Options markets may price higher implied volatility around the event; hedging costs can therefore change materially on announcement day.

Broader market and institutional perspectives for 2025–26

Into 2026, central banks globally are navigating a transition from restrictive policy to a more neutral or mildly accommodative stance as inflation moderates. For New Zealand, the path of the OCR will be data dependent. Most market forecasts in late 2025 anticipated a mild easing cycle that flattens or turns around mid‑2026, with the projected low point for the OCR positioned in the low‑2% area in the first half of next year.

Institutional commentary has suggested a cautious easing bias: the RBNZ appears prepared to lower rates further if needed, but will be sensitive to signs of persistent inflation or a tightening labour market that could prompt a pause.

What traders and investors should monitor after the announcement

• Governor Hawkesby’s tone during the press conference — watch for explicit references to the term “data‑dependent” or indications of a pause.
• Revised OCR trajectory and any change in the assumed timing of future policy adjustments.
• Domestic macro releases: subsequent CPI prints, wage data, and labour market reports.
• Global developments: US monetary policy signals, China growth indicators and trade conditions, and commodity price movements.

Potential impact on crypto and risk assets

Monetary easing in advanced economies has correlated with a risk‑on environment in several episodes over 2025, supporting equities and some higher‑beta assets. For crypto markets, lower short‑term interest rates can reduce funding costs and encourage capital allocation to risk assets, though correlations remain variable and liquidity conditions matter.

Market participants should be mindful of two dynamics:

• A weaker NZD could lift local currency returns for foreign investors exposed to New Zealand assets, but global risk sentiment and dollar strength will play a major role.
• Crypto volatility often spikes around macro announcements; integrated risk management and diversification remain important.

Key takeaways

• The RBNZ is expected to reduce the OCR to 2.25% in November 2025; the move aligns with a gradual easing cycle driven by moderating inflation and increased economic slack.
• Markets will scrutinize the MPS and Governor Hawkesby’s commentary for the likely path of rates through 2026.
• Expect elevated volatility in the NZD and potential spillovers to risk assets, including crypto, as investors reassess carry, funding costs and growth expectations.
• Traders should emphasise risk management around the announcement and monitor subsequent data for signs that the RBNZ may pause or extend easing into 2026.

What to watch next

Immediately after the MPS release and press conference, participants should watch for:

• Official OCR projection revisions in the MPS.
• Any explicit statement on whether further cuts are likely and the committee’s assessment of inflation persistence.
• Market reaction in NZD, short‑term interest rate swaps, and cross‑asset flows.

Final note

The RBNZ’s November decision will be an important data point for assessing central bank reaction functions in late 2025 and early 2026. While a 25 bp cut is widely expected, the language surrounding the move will determine whether markets view it as part of a sustained easing cycle or a near‑term adjustment. Investors and traders should combine close reading of the MPS with disciplined risk controls to navigate the event.

Disclaimer: This post is a compilation of publicly available information.
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