RBNZ Cuts Rates to 3.25% | US GDP Contracts | Inflation Cools | Key Events Ahead
Jun 02, 2025
4 min read
RBNZ Cuts Rates Again | US GDP Contracts | Inflation Cools
NZ slashes rates to 3.25%, US posts first GDP drop in 3 years, core PCE inflation eases to 2.5%
- Reserve Bank of New Zealand lowered rate to 3.25%
- U.S. economy contracted 0.2%
- US core PCE index, rose 0.1%
Market Recap:
New Zealand Interest Rate Decision: The Reserve Bank of New Zealand lowered its cash rate by 25 bps to 3.25% in May, matching forecasts and marking the lowest level since August 2022. This follows a series of cuts since October. The RBNZ said inflation remains within target but warned of downside risks to growth from global trade tensions. The rate is projected to fall to 2.85% by early 2026.
U.S. Gross Domestic Product (GDP) QoQ: The U.S. economy contracted 0.2% in Q1 2025, slightly better than the initial -0.3% estimate. The drop was driven by weak consumer spending and a sharp rise in imports ahead of Trump’s new tariffs. Fixed investment and exports helped soften the blow, but government spending fell sharply.
U.S. Core PCE Price Index YoY: The Fed’s preferred inflation gauge, the core PCE index, rose 0.1% month-over-month in April 2025, matching expectations. Year-over-year, it slowed to 2.5% from 2.7% in March the smallest annual increase since March 2021.
Oil and Commodities:
Brent Crude: Oil slips to $62.89 as OPEC+ confirms July output hike
Gold: Gold dips to $3,272 as markets assess tariff news.
Currency Watch:
EUR/USD: Euro slips to $1.1356, up just 0.27% for the month its weakest rise since February.
GBP/USD: Sterling slide to 1.34485 as strong greenback.
USD/JPY: Dollar dips to 143.88 yen but heads for first monthly gain since December (+0.6%).
Preview of the Upcoming Week:
June 3, 2025
Eurozone Consumer Price Index (CPI) YoY: Inflation in the Euro Area held steady at 2.2% in April, with expectations to ease to 2.0% by the end of the quarter. Longer-term forecasts project inflation around 1.9% in 2026 and 2.1% in 2027.
Watch: EUR/USD and EUR/GBP for moves influenced by ECB inflation outlook; Eurozone bonds and major European equities may also react.
June 4, 2025
Canada Interest Rate Decision: Canada’s benchmark interest rate stands at 2.75%, expected to hold steady through the quarter. Longer-term projections see rates easing to 2.25% in 2026 and 2.00% in 2027.
Watch: USD/CAD and CAD-related assets, especially Canadian bonds and energy stocks, for impacts from rate expectations.
June 5, 2025
Eurozone Interest Rate Decision: The Euro Area benchmark interest rate is currently 2.40%, expected to decline to 2.15% by quarter-end. Longer-term forecasts see rates falling to 1.90% in 2026 and 1.50% in 2027.
Watch: EUR/USD, EUR/GBP, and Eurozone bonds for moves linked to interest rate shifts.
June 6, 2025
U.S. Nonfarm Payrolls: U.S. Non-Farm Payrolls rose by 177K in April 2025, but are expected to slow to 100K by the end of the quarter, with longer-term forecasts at 170K in 2026 and 150K in 2027. Key assets to watch: EUR/USD, USD/JPY, GBP/USD, AUD/USD, S&P 500, Nasdaq, gold, oil, and U.S. Treasuries — all sensitive to shifts in labor market strength and Fed policy expectations.
