New Zealand cuts rates by 150 basis points

by Richard Kilner

Story link: New Zealand cuts rates by 150 basis points

The Reserve Bank of New Zealand has made the decision to slash the Official Cash Rate (OCR) by 150 basis points to 5%.

Governor Alan Bollard has stated that the move was made largely as a result of the continuing turbulence in the world’s financial markets and the worsening forecast for global growth.

Bollard added that the Reserve Bank’s predictions for New Zealand’s growth had also deteriorated.

The Bank’s medium term goal of getting inflation back inside the 1-3% target band should be easily met in the first half of next year due to weakening inflationary pressures both domestically and globally.

Over the last few months the country’s OCR has fallen by 325 basis points, a sharp reduction made to try and counter the dangers of inflation slipping below the lower threshold of the target band.