(Bloomberg) -- New Zealand’s central bank slashed interest rates by half a percentage point, more than economists expected, saying it remains committed to reviving inflation as growth slows.
“Our actions today demonstrate our ongoing commitment to ensure inflation increases to the mid-point of the target range, and employment remains around its maximum sustainable level,” the Reserve Bank said Wednesday after lowering the official cash rate to 1%, a fresh record low. “Growth has slowed over the past year and growth headwinds are rising. In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets.”
Economists had expected a quarter point cut in the OCR. The New Zealand dollar fell almost a full U.S. cent to 64.50 cents on the news.
New Zealand’s slowing economic growth has prevented inflation from returning to the midpoint of the RBNZ’s 1-3% target range, while the international outlook has darkened as trade tensions between the U.S. and China escalate.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net
To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net
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