RBNZ cuts rates by 25 bps to 5.25, first easing in over 4 yrs
RBNZ flags more cuts ahead, taking rate to 3.85 end2025
Kiwi dlr tumbles as markets bet on more aggressive easing path
Market pricing sees policy rate near 3.0 by end of 2025

WELLINGTON, Aug 14 Reuters New Zealand39;s central bank slashed its benchmark rate for the first time since March 2020 and flagged more cuts over coming months, saying inflation was nearing its 1 to 3 target in a sharp dovish tilt that sparked a selloff in the kiwi dollar.

The decision to reduce rates by 25 basis points to 5.25 came almost a year ahead of the Reserve Bank of New Zealand39;s RBNZ own projections, taking some market players by surprise and prompting bets of an aggressive easing path through to the end of 2025.

Markets had priced in almost a 70 chance of a quarterpoint reduction following a string of softer economic data, but the cut defied most economists39; expectations, with 19 of 31 economists in a Reuters poll having forecast the RBNZ to hold steady as it has since May 2023.

The Committee agreed to ease the level of monetary policy restraint by reducing the OCR official cash rate, the central bank said in its statement, and signalled more cuts ahead depending on how inflation evolves.

Investors reacted by knocking the kiwi dollar down 1 to 0.6015 , erasing most of the 1 gains made overnight as soft U.S. producer price data slugged the U.S. dollar.

Swaps shifted to imply another 32 basis points of easing by…