The Reserve Bank of New Zealand lowered its Official Cash Rate by 25 basis points to 3.0%, the lowest level in three years and in line with economists’ expectations. The move unwinds part of the 525-bp tightening cycle that ended last year and brings cumulative easing since August 2024 to 250 basis points. Minutes show the Monetary Policy Committee voted 4–2 for the reduction, with two members arguing for a larger 50-bp cut amid signs of spare capacity and subdued domestic demand. The bank’s rate track now projects the OCR to bottom near 2.5% next year, and Governor Adrian Hawkesby said the next two meetings remain “live” as policymakers assess incoming data. The central bank said the economy stalled in the second quarter and warned that global policy uncertainty, including recent tariff changes, is weighing on consumption and investment. Annual inflation stands at 2.7% and is expected to edge up to 3% in the September quarter—near the top of the 1–3% target band—before drifting back to the 2% midpoint by mid-2026. Financial markets reacted to the unexpectedly dovish tone: the New Zealand dollar fell about 1.2% to a four-month low of US$0.5822, while two-year swap rates slipped below 3%. Traders now fully price in at least two additional quarter-point cuts by November, and some banks, including BNZ, expect the policy rate to reach 2.5% before year-end.