08:01 AM EDT, 10/03/2025 (MT Newswires) -- UBS said it expects the Reserve Bank of New Zealand to deliver a 50bps cut at Wednesday's policy meeting after a significantly weaker-than-expected gross domestic prodcut print, more balanced inflation risks and only tentative signs of a recovery into 2026.

The RBNZ had already turned dovish in August prior to the GDP data, with two of six committee members voting for a 50bps cut, wrote the bank in a note to clients.

It lowered its own cash rate forecast to around 2.55% by Q4 2025 (previously it was 2.85%). The risk to the UBS call sits with a smaller 25bps cut, particularly if Q3 QSBO data show unexpected strength or the RBNZ downplays Q2 GDP weakness.

The bank points out that money markets have priced in a 30bps reduction for October and 75bps by mid-2026. UBS remains long the AUD/NZD in its short-term opportunities

and expects the pair could move higher into year-end.

That said, a material shift in the RBNZ's views is a risk, it added.