Sixth cut in row for cash rate

The Reserve Bank of New Zealand has cut the official cash rate (OCR) by 25 basis points from 3.5 per cent to 3.25 per cent.

It is the sixth consecutive fall for the OCR since standing at 5.5 per cent in August last year.

The bank’s monetary policy committee voted to make the latest change because inflation is within its one to three per cent target band, and the bank is considered to be well placed to respond to domestic and international developments to maintain price stability over the medium term.

The bank says the New Zealand economy is recovering after a period of contraction, with high commodity prices and lower interest rates supporting overall economic activity. 

“Elevated export prices and recent reductions in the OCR are expected to support a modest pace of growth in the New Zealand economy, even as increased global tariffs are expected to slow global economic growth,” it adds.

“Both tariffs and increased policy uncertainty overseas are expected to moderate New Zealand’s economic recovery and reduce medium-term inflation pressures. 

“However, there remains considerable uncertainty around these judgements.”