AUD/NZD Pulls Back Toward 1.0800 After RBNZ's Expected 25 bps Rate Cut

AUD/NZD Retreats Toward 1.0800 After RBNZ’s Expected Rate Cut

The AUD/NZD currency pair edged lower toward the 1.0800 level during Wednesday’s Asian session after the Reserve Bank of New Zealand (RBNZ) cut its Official Cash Rate (OCR) by 25 basis points, from 3.50% to 3.25%, in line with market expectations.

Following the decision, the New Zealand Dollar (NZD) saw a modest rally, briefly strengthening against the Australian Dollar (AUD). However, dip-buying interest around 1.0815 in the AUD/NZD cross failed to generate meaningful upward momentum, as traders awaited additional guidance from the RBNZ’s post-meeting press conference.

In its projections, the RBNZ signaled further easing ahead, forecasting the OCR to decline to 3.12% by September 2025 and to 2.87% by June 2026. This increased market expectations for additional rate cuts, exerting pressure on the NZD over the medium term.

Meanwhile, the Australian Dollar remained supported by a slightly higher-than-expected monthly CPI reading for April, which may reduce the likelihood of a near-term rate cut by the Reserve Bank of Australia (RBA). This inflation data could provide a floor for AUD/NZD and attract fresh buying interest if RBA policy remains steady.

Overall, despite a temporary bounce, the AUD/NZD pair remains under pressure amid diverging central bank outlooks, with near-term direction likely to be shaped by further commentary from RBNZ officials and upcoming Australian economic data.