Skip to content

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

RBNZ's surprise 50bp rate cut sends NZD to 7-week low

The Reserve Bank of New Zealand's unexpected 50 bp rate cut has sent the Kiwi dollar plunging to a seven-week low, as economic data shows subdued growth and inflation remains under control.

Currency Source: Adobe images

RBNZ cuts official cash rate

The Reserve Bank of New Zealand (RBNZ) has cut its official cash rate (OCR) today by a jumbo 50 basis points (bps) to 4.75%, following the lead set by the Federal Reserve (Fed) last month. In response, the New Zealand dollar has hit a seven-week low.

Surprise rate cut in August

At its last meeting in August, the RBNZ surprised markets by cutting the OCR by 25 bps to 5.25%, marking its first interest rate cut since March 2020. This unexpected move, fully backed by the Committee, was deemed "not a difficult decision" by Governor Orr, emphasising a "measured approach" and a data-dependent strategy.

Since then, economic data has been subdued. Gross domestic product (GDP) contracted by 0.2% for the second quarter (Q2) 2024, which was better than the -0.5% expected. Upcoming third quarter (Q3) 2024 headline inflation (16 October) is expected to be 2.2% year-on-year (YoY), slightly below the RBNZ's August Monetary Policy Statement (MPS) forecast of 2.3% YoY.

Confidence in inflation control

In today’s RBNZ decision statement, it was noted that members are confident that inflation has returned to the target band and is expected to remain there. "The Committee assesses headline consumer price inflation to be within its 1 to 3 percent target band in the September 2024 quarter and to remain around the midpoint in the medium term."

Debating the rate cut size

The Committee discussed the benefits of a 25 bp cut versus a 50 bp cut before agreeing that a 50 bp cut was “most consistent with the Committee’s mandate of maintaining low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate.”

Dovish forward guidance

While today's meeting did not provide updated forecasts and wasn't accompanied by a press conference, the forward guidance in the decision statement sounded dovish, providing the RBNZ with the flexibility to continue cutting rates into the year-end.

“The Committee agreed that the economic environment provided scope to further ease the level of monetary policy restrictiveness, consistent with its mandate of low and stable inflation.”

The rates market has 40 bps of rate cuts priced for the RBNZ’s next meeting on 27 November, which suggests another 50 bp rate cut is likely before year-end, taking the OCR to 4.25%.

RBNZ OCR chart Source: Reserve Bank of New Zealand
RBNZ OCR chart Source: Reserve Bank of New Zealand

NZD/USD technical analysis

The NZD/USD has fallen over 4% in just seven trading sessions this month after striking a high of 0.6379 on the last day of September. The Kiwi dollar's fall came initially at the hands of risk aversion flows after Iran fired a volley of missiles into Iran in early October, raising Middle Eastern geopolitical tensions.

The sell-off in the NZD/USD then accelerated following the release of a firmer-than-expected US non-farm payrolls report last week, which pared back expectations of a follow-up 50 bp rate cut from the Fed in November.

The sell-off was capped off by today's jumbo 50 bp RBNZ rate cut, which saw the NZD/USD fall from 0.6130/32 to a low of 0.6095 before finding support at the 200-day moving average, coming in at 0.6098.

Looking forward, the NZD/USD must remain above the 200-day moving average at 0.6098 on a sustained basis to prevent it from taking another leg lower towards support at approximately 0.6040. On the topside, enthusiastic sellers will likely emerge in the 0.6200/20 resistance band.

NZD/USD daily chart Source: TradingView
NZD/USD daily chart Source: TradingView
  • Source: TradingView. The figures stated are as of 9 October 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market.

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Equities
  • Indices
  • Forex
  • Commodities


Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.