New Zealand Cuts Cash Rate to 3.25%


The Reserve Bank of New Zealand reduced the Official Cash Rate (OCR) by 25 basis points to 3.25 percent on June 11th. It is the first cut in more than four years to support income and demand weakened by lower dairy prices and recent rise in petrol cost.

Statement by Reserve Bank Governor Graeme Wheeler:                                                   

Growth in the global economy remains moderate. Data on economic activity in the US, China and Australia has been mixed, although there has been some  improvement in the euro area and Japan. Volatility in financial markets has increased.                                                                      

The New Zealand economy is growing at an annual rate around three percent, supported by low interest rates, high net migration and construction activity, and the decline in fuel prices. However, the fall in export commodity prices that began in mid-2014 is proving more pronounced. The weaker prospects for dairy prices and the recent rises in petrol prices will slow income and demand growth and increase the risk that the return of  inflation to the mid-point would be delayed.                                    

We expect further easing may be appropriate. This will depend on the emerging data.

RBNZ | anna@tradingeconomics.com
6/10/2015 10:43:07 PM