WELLINGTON, Nov. 27 (Xinhua) -- The Reserve Bank of New Zealand's Monetary Policy Committee on Wednesday cut the official cash rate (OCR) by 50 basis points to 4.25 percent, the lowest since November 2022, as inflation returns to the target band.
The move followed another 50-point cut in October. It has been the third OCR drop since August, a reduction of 125 basis points combined.
The latest drop would mean more relief for Kiwis' back pockets, good news for families and businesses, both directly and indirectly, Finance Minister Nicola Willis told a press conference.
Responding to the cut, New Zealand retail banks were quick to cut their floating mortgage rates. For businesses, lower rates mean lower borrowing costs and more money in the economy, Willis said.
"Annual consumer price inflation has declined and is now close to the midpoint of the Monetary Policy Committee's 1 to 3 percent target band," the committee said.
Inflation expectations are also close to target and core inflation is converging to the midpoint, it said, adding that the committee expects to be able to lower the OCR further early next year, depending on economic conditions.
"Economic growth is expected to recover during 2025, as lower interest rates encourage investment and other spending," it said, adding that current economic activity in New Zealand remains subdued and output continues to be below its potential.
Employment growth is expected to remain weak until mid-2025, and for some, financial stress will take time to ease, it noted. ■
