For the first time in more than two years, the Reserve Bank (RBNZ) has reduced the benchmark interest rate in its efforts to boost growth and protect it from a slowing global economy. The official cash rate (OCR) is reduced by a quarter to 1.5 %.
Governor Adrian Orr stated that the economy has gone through a soft patch with slow immigration, a slowdown in trust, investment and job growth and inflation remaining below the target of the RBNZ.
Over the past two years, RBNZ has reported that rates of interest would stand for a long time, probably well into 2020, but has warned against the downside of the risk balance for the economy, inflation and the rest of the world.
The forward estimates of the central bank's cash rate imply a further rate reduction by year-end or early next year, but without any increase before the end of 2021. An economist said that a further cut in rates is likely to be necessary, but that was not urgent.
It was the first decision to emerge from the new monetary policy look of the RBNZ committee, comprising three external and four bank officials.
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