Reserve Bank of New Zealand Governor Christian Hawkesby speaks at a press conference following the official cash rate decision, in Wellington, New Zealand, May 28, 2025. Reuters/Lucy Craymer

By Lucy Craymer and Renju Jose

AUCKLAND (Reuters) -Early indicators suggest the economy had been expanding during the second half of this year and demand had stabilised, Reserve Bank of New Zealand Governor Christian Hawkesby told a parliamentary committee on Thursday.

* The RBNZ cut its benchmark official cash rate by 25 basispoints to 2.25% on Wednesday, the lowest since mid-2022, butpolicymakers signalled an end to the easing cycle as the economyshowed early signs of picking up. * "We're not waiting for a recovery; a recovery is happeningright at the moment. ... All our indicators are telling us nowthat the economy expanded through Q3," Hawkesby said. * Hawkesby said labour market indicators will be the lastones to turn but there are a number of indicators includingvacancies, hours worked, hours paid that are starting to turnaround. * "Looking to the influence of monetary policy on the labourmarket, is going to be positive rather than negative," he said. * Hawkesby said 2026 will have low and falling inflation,and an expanding economy. "It's a good environment to bestepping into," he said.

(Reporting by Lucy Craymer in Auckland and Renju Jose in Sydney; Editing by Nia Williams and Richard Chang)