Panoramic view of Auckland city skyline, New Zealand, November 9, 2023.
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The Bank of New Zealand expects Cut the benchmark interest rate by 50 basis points On Wednesday, it was the third consecutive rate cut as the country struggles to shore up its struggling economy.
The Reserve Bank of New Zealand’s current interest rate is 4.25%. Economists polled by Reuters had expected the bank to cut interest rates by 50 basis points.
Following the 25 basis points cut in August, the Federal Reserve Bank of New Zealand lowered the cash rate by 50 basis points in October. In a statement on Wednesday, The Bank said New Zealand’s economic activity remained subdued and output continued to fall below its potential.
New Zealand GDP growth has been slowing, falling 0.2% in the June 2024 quarter compared with the March 2024 quarter, marking a contraction in the fourth quarter. The annual rate was also down 0.2%.
“New Zealand’s economic activity remains subdued and output continues to fall below its potential,” the bank said.
Lower inflation gives the country room to cut interest rates and boost economic growth.
The Bank of New Zealand said price growth pressures had eased and inflation remained close to its midpoint. mid-term target range 1% and 3%.
New Zealand’s annual inflation rate surges to highest level in more than three decades 7.3% In the sixth quarter of 2022, the temperature has dropped significantly. Based on data for the September 2024 quarter, the figure is 2.2% New Zealand statistics for October.
The Federal Reserve Bank of New Zealand said: “If economic conditions continue to develop as expected, the Committee expects to be able to further reduce the OCR (Official Cash Rate) early next year.”
Economic growth is expected to resume in 2025 as lower interest rates spur investment and spending, it added. However, job growth is expected to remain weak until mid-2025.
