Official cash rate down to 3.75%
The Reserve Bank of New Zealand has cut the official cash rate (OCR) by 50 basis points from 4.25 per cent to 3.75 per cent and says there is scope to lower it further throughout the year.
Members of its monetary policy committee made the decision after a meeting on February 19 where they noted annual consumer price inflation remains near the midpoint of the bank’s one to three per cent inflation target band.
The committee noted the economic outlook remains consistent with inflation remaining in that range over the medium term, giving it confidence to continue lowering the OCR.
The bank says economic activity in New Zealand remains subdued but growth is expected to recover during 2025.
“Lower interest rates will encourage spending, although elevated global economic uncertainty is expected to weigh on business investment decisions,” it explains.
“Higher prices for some of our key commodities and a lower exchange rate will increase export revenues.
Employment growth is expected to pick up in the second half of the year as the domestic economy recovers.”
The committee discussed near-term risks to its outlook and says while lower interest rates are expected to underpin a recovery in the domestic economy, “the speed and timing of the recovery is uncertain”.
