07:50 AM EDT, 10/07/2025 (MT Newswires) -- The Reserve Bank of New Zealand is slated to announce its policy decision at 9 p.m. ET on Tuesday.

Consensus is divided between a 25bps cut and double that amount, with a slight leaning toward 25bps, said Scotiabank. Markets are also somewhat on the fence with about a third of a percentage point cut priced going in.

Whatever the RBNZ does, it may surprise one or the other camp, noted the bank. In this environment, the central bank may take a risk management approach toward which would be the nastier surprise. That may counsel upsizing.

Explicit forward guidance that was updated at the August meeting added to projected easing, stated Scotiabank. Since then, GDP shrank by 0.9% quarter-over-quarter seasonally adjusted nonannualized in Q2, which was materially weaker than consensus at -0.3%, which was also the RBNZ's forecast.

A weakening economy that has registered no growth over the past year (-0.6% year over year) is opening up more disinflationary pressure, which may allow the RBNZ to look through the fact that lagging inflation data remains above the 2% target at 2.7% year over year, added the bank.