NZ central bank stuns with 50bp rate cut

The Reserve Bank of New Zealand has surprised markets by cutting the official cash rate (OCR) by a bigger-than-expected 50 basis points to 1.0 per cent as it looks to prop-up a cooling economy.

“The Monetary Policy Committee agreed that a lower OCR is necessary to continue to meet its employment and inflation objectives,” RBNZ’s monetary policy committee said in a statement accompanying its rates decision on Wednesday.

The central bank lowered its cash rate by 25 basis points (bps) in May, and economists polled by Reuters had predicted policymakers would cut rates again this week by 25 bps.

The New Zealand dollar tumbled one per cent against the US dollar to 64.43 US cents – a 10-month low.


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