Australia considers rate cuts as inflation holds, New Zealand lowers rate to 3.25%

Australia keeps room for more rate cuts as inflation sticks, while New Zealand’s Reserve Bank trimmed its benchmark rate by 25 basis points to 3.25%. The Australian Bureau of Statistics said on Wednesday that the monthly consumer price index in April rose 2.4% from a year earlier, the same pace as in March and a touch above the 2.3% forecast. A trimmed-mean measure of inflation edged up to 2.8% from 2.7%, and a measure excluding holiday travel and volatile items increased to 2.8% from 2.6%. All three figures remained inside the RBA’s goal of 2 to 3%. Because the April update covers only part of the full CPI basket and leans toward goods rather than services, markets have been calm about these numbers. Australia shows signs of reslience Goods prices were up just 0.9% compared to 2024. The Australian dollar, on the other hand, hovered near US$0.6440, and three-year bond futures held at 96.60 as traders judged the data unlikely to derail the central bank’s easing path. “The Reserve Bank is likely to deliver further monetary easing, given the upside risks to inflation have largely disappeared while global policy uncertainty remains elevated,” said Cherelle Murphy, chief economist at EY. Last week, the RBA cut its interest rate to a two-year low, arguing that cooler domestic inflation gave it room to cushion the economy from global trade tensions. The board kept the door open to more action in the coming months. Australia’s labor market has so far remained resilient despite slower global growth. Employment has risen steadily, keeping the jobless rate at 4.1%. Wage growth, however, remains modest, limiting the danger of a wage-price spiral. April’s figures show that health costs climbed 4.4% from a year earlier after insurers lifted premiums at the start of the month. Holiday travel and accommodation jumped 5.3%, reflecting strong demand for Easter and school breaks. Those gains offset cheaper fuel, which had eased after earlier spikes. New Zealand lowers rates and signals a slightly deeper easing cycle The Reserve Bank of New Zealand (RBNZ) cut its benchmark rate by 25 basis points to 3.25%, marking its sixth straight reduction. It signaled a deeper easing cycle than its forecast, primarily due to rapid shifts in US trade rules. “Inflation is within the target band, and the Committee is well placed to respond to domestic and international developments to maintain price stability over the medium term,” the RBNZ said after its meeting. Since August, Wellington’s policymakers have lowered rates by a combined 225 basis points, using subdued inflation to support growth as global risks increase. The bank now expects the cash rate to stand at 2.92% in the fourth quarter of 2025 and 2.85% in the first quarter of 2026. Wednesday’s decision was not unanimous: one of the five committee members preferred to hold at 3.5%. That split surprised traders and lifted market rates. The New Zealand dollar edged to about US$0.5970 from US$0.5930, while two-year interest-rate swaps climbed 11 basis points to 3.23%. The central bank warned that sweeping U.S. tariffs could hurt demand for New Zealand’s exports, especially in Asia, and weigh on domestic spending. “The announced increase in U.S. tariffs will lower global demand for New Zealand’s exports, particularly from Asia, constraining domestic growth. Heightened global policy uncertainty is expected to weigh on business investment and consumption in New Zealand,” the central bank cautioned. KEY Difference Wire helps crypto brands break through and dominate headlines fast

Source: Cryptopolitan