Wellington, Aug 20 (Bloomberg) – New Zealand’s central bank reduced interest rates to their lowest level in three years and indicated additional cuts may follow, as signs of economic stagnation grow. The local currency declined following the announcement.
The Reserve Bank of New Zealand cut its Official Cash Rate by 25 basis points to 3% on Wednesday, in line with expectations from 22 out of 23 economists surveyed by Bloomberg. Updated projections from the RBNZ suggest a high likelihood of two further quarter-point reductions in the coming months.
Policymakers cited weak domestic activity and subdued inflationary pressures as key reasons for the easing move. The decision reflects growing concern that the economy has lost momentum and requires monetary support to regain traction.
The rate reduction aims to stimulate borrowing and investment, supporting consumption and business expansion amid softening demand. The kiwi dollar weakened post-announcement, reflecting market expectations of a prolonged period of accommodative policy.
— news from Bloomberg.com
— News Original —
RBNZ Signals Further Rate Cuts to Revive Flagging Economy
New Zealand’s central bank cut interest rates to a three-year low and signaled further easing, saying the economy has stalled. The local dollar fell. n nThe Reserve Bank’s Monetary Policy Committee lowered the Official Cash Rate by 25 basis points to 3% Wednesday in Wellington, as expected by 22 of 23 economists in a Bloomberg survey. The RBNZ’s new forecasts indicate a good chance of two more 25-point cuts.