Investing.com– The Reserve Bank of New Zealand cut interest rates by 50 basis points on Wednesday and signaled further easing early next year, citing subdued domestic economic activity and waning inflationary pressures.
The RBNZ cut its official cash rate by 50 bps to 4.25%, in line with analyst expectations. But some analysts had forecast a bigger, 75 bps cut, given that Wednesday’s decision is the central bank’s final one for 2024.
“Economic growth is expected to recover during 2025, as lower interest rates encourage investment and other spending. Employment growth is expected to remain weak until mid-2025 and, for some, financial stress will take time to ease,” the central bank said in its policy statement.
The RBNZ began its easing cycle in August, trimming rates by 25 basis points, followed by a sharper 50-basis-point cut in October. With inflation now comfortably within the central bank’s target range of 1-3%, the RBNZ has shifted focus toward stimulating a flagging economy.
