RBNZ Expected to Cut as NZD Lags Behind

The Reserve Bank of New Zealand (RBNZ) is widely expected to deliver another interest rate cut on Wednesday, 26 November. This move would push New Zealand’s Official Cash Rate (OCR) further below the policy settings of both the United States and Australia. That widening gap is likely to increase downward pressure on the already under-performing New Zealand dollar.

Markets are pricing in a 25-basis-point cut from 2.50% to 2.25%, following October’s surprise 50-point “jumbo” move that took the OCR down from 3.00% to 2.50%. Over the past 15 months, the RBNZ has cut from 5.50% to 2.50%, one of the more aggressive "easing cycles" among advanced economies.

Cut Largely Priced In:
Interest-rate markets and bank economists are treating a November cut as close to a done deal. Westpac’s latest commentary, for example, notes that overnight index swaps are assigning almost 100% probability to a 25-point cut tomorrow, with very little chance of a repeat 50-point move.

New Zealand Falls Below US and Australian Rates:
If the RBNZ cuts as expected, New Zealand’s Official Cash Rate will sit further under the policy rates of both the US Federal Reserve and the Reserve Bank of Australia (RBA):

• New Zealand (OCR): currently 2.50%, likely 2.25% after 26 November
• United States (Fed funds target range): 3.75–4.00% after the Fed’s 25-bp cut on 29 October
• Australia (RBA cash rate): 3.60%, held steady at the November meeting

The Fed has signalled that further cuts this year are “not a foregone conclusion”, emphasising uncertainty and internal divisions on whether to ease again in December. In Australia, the RBA is sending a “higher for longer” message after leaving rates unchanged, even as inflation runs a little above its 2–3% target band.

By contrast, New Zealand is still clearly in 'easing mode', and that mode is increasingly reflected in the exchange rate.

NZD Struggles Against US and Australian Dollars:
Against the US dollar, the NZD is trading near the lower end of its post-GFC range:

• Recent data show NZD/USD around the mid-0.56s, with the weakest daily close this month near 0.5585 on 20 November.
• The RBNZ’s own exchange-rate statistics and trade-weighted index (TWI) confirm a softer NZD across major trading partners.

The picture is similarly weak against the Australian dollar:

• In the last six months, the NZD/AUD rate has fallen to a low around 0.863–0.864, recorded in mid-November - one of the weakest readings of 2025.
• RBA data show 1 AUD buying about 1.15 NZD in recent days, implying roughly 1 NZD ≈ 0.87 AUD - a soft level for the NZD.

In simple terms, New Zealanders are getting less in US and Australian dollars for each NZD they earn.