RBNZ Warns Tariffs Blunt Impact of 50-Point Rate Cut

Reserve Bank of New Zealand Governor Paul Hawkesby said the economy has responded more slowly than expected to the central bank’s recent interest-rate reductions, including the 50-basis-point cut delivered earlier this year. He told reporters that businesses and consumers remain unusually cautious, requiring a substantial boost to confidence and activity, and he expects lenders to pass on projected future cuts to support growth. Hawkesby added that global uncertainties, higher tariffs and other trade barriers are weighing on business and consumer sentiment in New Zealand and abroad, acting as a “negative demand shock”. Assistant Governor Karen Silk echoed the concern, noting that tariffs are ultimately damaging for all trading partners. The governor also pointed to a flat housing outlook alongside weak demand indicators as reasons monetary policy must continue working to encourage growth. He reiterated that the RBNZ stands ready to adjust settings further if incoming data warrant additional support.