Wellington, Aug 20
New Zealand's central bank on Wednesday lowered the Official Cash Rate (OCR) by 25 basis points to 3 per cent.
Annual consumer price inflation currently sits near the top of the 1-to-3 per cent target band but is expected to return to the 2 per cent midpoint by mid-2026 due to easing domestic inflation pressures and spare economic capacity, according to a statement by the Reserve Bank of New Zealand's Monetary Policy Committee.
The country's economic recovery stalled in the second quarter amid global economic policy uncertainty, falling employment, higher essential costs, and declining house prices, it said.
Looking ahead, cautious household and business behaviour could slow growth further, though the economic recovery might accelerate as recent interest rate cuts take effect, News Agency reported, quoting the committee.
Future OCR decisions will depend on further data on the speed of New Zealand's economic recovery, with potential for further reductions if medium-term inflation pressures continue to ease, it added.