Half Percentage Point New Zealand Central Bank Rate Cut
October 9, 2024
The Reserve Bank of New Zealand’s Official Cash Rate was cut at today’s scheduled Board meeting to 4.75% from 5.25%. A previous 25-basis point initial reduction at the prior policy review in August ended fifteen months of being kept at a peak of 5.5%. Noting in a released statement that economic activity is subdued in New Zealand and below trend in the global economy, members of the Monetary Policy Committee assert that the new 4.75% OCR level still represents a restrictive stance and “consistent with ensuring low and stable inflation.” Officials believe that “annual consumer price inflation is within its 1 to 3 percent inflation target range and converging on the 2 percent midpoint.” There was a discussion about whether to cut the rate by 25 or 50 basis points, resulting in a decision that favored the more forceful move. CPI inflation had dropped from 7.3% in the second quarter of 2022 to 3.3% two years later, and GDP had declined 0.5% between the second quarters of 2023 and 2024. From a pandemic floor of 0.25% maintained from March 2020 until October 2021, the OCR had been lifted 50 bps in 2021, 350 bps in 2022 and 125 bps during the first half of 2023.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
ShareThis
