The central bank of New Zealand said it was getting close to a point of “low and stable inflation” as it cut the main interest rate by half a percentage point on Wednesday, the lowest level in eighteen months.
The main official cash rate was dropped by the Reserve Bank of New Zealand to 4.75 percent, a level not seen since February of last year, but the bank did not provide any guidance on potential future changes.
According to the bank, the move was taken to “avoid unnecessary instability in output, employment, interest rates, and the exchange rate”.
For several months, the economy of New Zealand has been in danger of entering a recession due to a property crisis, high borrowing costs, and high prices that have negatively impacted consumer confidence.
Prior to the expected announcement, major banks had already lowered lending rates, and Finance Minister Nicola Willis declared that “brighter days are ahead” for businesses and households who may now expect a reduction in mortgage payments.
