The AUD/NZD currency pair hovered above a 4-week low of 1.0777 on Wednesday in the wake of the RBNZ’s policy decision and Australia’s inflation data.

The Reserve Bank of New Zealand cut its official cash rate by 25 basis points to 3.25% at its May meeting, in line with market consensus.

This way, borrowing costs were brought to their lowest level since August 2022. The rate adjustment came with signals that a more extensive monetary easing cycle may unfold.

The RBNZ monetary policy committee cited elevated commodity prices and easing interest rates as supportive forces for New Zealand’s economic momentum. Despite this, the central bank flagged risks ahead that could hamper recovery.

RBNZ Governor Christian Hawkesby stated that both tariffs and heightened policy uncertainty abroad were anticipated to temper New Zealand’s economic recovery and diminish medium-term inflationary pressures.

The RBNZ now projects the cash rate will descend to 2.92% in Q4 of 2025 and to 2.85% in Q1 of 2026.

In the meantime, on the data front, Australia’s monthly Consumer Price Index went up 2.4% in April, or at the same rate as in the prior two months, while exceeding market expectations of a 2.3% rise.

The CPI has now remained within the RBA’s 2% to 3% inflation target range for the ninth consecutive month.

The Core CPI, which excludes volatile items and travel costs, rose 2.8% in April, after a 2.6% gain in the preceding month.

The AUD/NZD currency pair was last down 0.37% on the day to trade at 1.0787.