subscribe to our newsletter
NZ central bank cuts rates

NZ central bank cuts rates

The Reserve Bank of New Zealand has reduced its official cash rate by 25 basis points to 3.25 per cent, indicating congruence in cross-Tasman monetary policy.

The move follows yesterday’s board meeting and is due to low inflationary pressures and the expected weakening in demand.

“The New Zealand economy is growing at an annual rate around three per cent, supported by low interest rates, high net migration and construction activity, and the decline in fuel prices,” governor Graeme Wheeler said.

“However, the fall in export commodity prices that began in mid-2014 is proving more pronounced.

“The weaker prospects for dairy prices and the recent rises in petrol prices will slow income and demand growth and increase the risk that the return of inflation to the mid-point would be delayed.”

Mr Wheeler said the exchange rate remains overvalued, even though the fall in commodity prices and expected weakening in demand has seen it decline from its recent peak in April.

“In light of the forecast deterioration in the current account balance, such an exchange rate adjustment is needed to put New Zealand’s net external position on a more sustainable path.

“We expect further easing may be appropriate. This will depend on the emerging data,” Mr Wheeler concluded.

NZ central bank cuts rates
mortgagebusiness logo

Latest News

The most expensive segment of the property market has experienced the sharpest fall in dwelling values over the past 12 months, according to...

Melbourne suburbs have experienced the largest property value growth over the last 25 years, according to new research. ...

Recent reports suggest that the recent rate hike in the US will impact Aussie mortgage rates. Meanwhile, pricing has become the default leve...

Promoted Stories

podcast

LATEST PODCAST: How the market has changed in the last 25 years, royal commission hearings, broker advocacy

Do you expect access to credit to get harder this year?