On July 3, 2017, a security guard stood at the main entrance of the Reserve Bank of New Zealand in downtown Wellington, New Zealand.
David Gray | Reuters
The Bank of New Zealand lowered its benchmark interest rate by 50 basis points after the monetary policy meeting. This is the second consecutive time that the Bank of New Zealand has lowered its benchmark interest rate.
The rate cut brings the Reserve Bank of New Zealand’s interest rate to 4.75% from 5.25%. Economists polled by Reuters expected the move.
In August, the Federal Reserve Bank of New Zealand unexpectedly cut interest rates by 25 basis points. The central bank said at the time that the pace of further easing would depend on its confidence in a low-inflation environment.
In a statement on Wednesday, The central bank said it “assessed annual consumer price inflation to be within the inflation target range of 1% to 3%, and towards the midpoint of 2%”.
new zealand annual Inflation rate reached 7.3% In the second quarter of 2022, this was the highest level in more than three decades. Although it has fallen to 3.3% in the quarter to June 2024, it is still above the New Zealand Federal Reserve Bank’s level mid-term target range Between 1% and 3%.
The Federal Reserve Bank of New Zealand also noted that New Zealand’s economic activity was “weak”, in part due to restrictive monetary policy.
The Federal Reserve Bank of New Zealand noted: “Business investment and consumer spending have been weak, and employment conditions continue to be weak. Slow productivity growth has also limited economic activity.”
Therefore, a rate cut is “appropriate” to achieve and maintain low and stable inflation and avoid instability in output, employment and the New Zealand dollar.
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