RBNZ’s Gai says U.S. tariffs a negative demand shock for New Zealand
Reserve Bank of New Zealand Monetary Policy Committee member Prasanna Gai said on Friday that U.S. tariffs have delivered a negative demand shock to New Zealand’s small, trade-dependent economy, adding to the headwinds already restraining growth.
Speaking at an event in Melbourne, Gai said the impact of tariffs, coupled with a broader uncertainty shock, had partly offset the effects of monetary easing undertaken since 2024.
The RBNZ has cut interest rates by 300 basis points since August 2024 in an effort to revive demand and support employment.
Despite those efforts, New Zealand’s economy remains sluggish. With inflation now comfortably within the 1–3% target band, markets believe policymakers retain room to reduce rates further if global weakness and trade disruptions continue to weigh on activity.
