New Zealand cuts interest rate by 150 basis points to 5.00%. | CountingPips Forex Blog

December 3, 2008 - Forex Economic News

New Zealand cuts interest rate by 150 basis points to 5.00%.

The Reserve Bank of New Zealand reduced its interest rate by 150 basis points today according to a government release. The rate reduction brought the official cash rate from 6.50 percent to 5.00 percent and follows a reduction by 100 basis points in October and by 50 basis points in September. The rate cut was widely expected by economists as the New New Zealand interest rate, economy, NZD Zealand economy has been contracting since the beginning of this year. The New Zealand Gross Domestic Product declined by 0.3 percent in the 1st quarter and by 0.2 percent in the 2nd quarter.

Reserve Bank Governor Alan Bollard stated in the release that, "ongoing financial market turmoil and the marked deterioration in the outlook for global growth have played a large role in shaping today’s decision. Activity in most of our trading partners is now expected to contract or grow only very slowly over the next few quarters" and that, "Economic activity in New Zealand will be further constrained as a result, compared with our view in October. "

The RBNZ rate cut was unprecedented as today's reduction was the first time the RBNZ had cut the rate by 150 basis points since the bank adopted its official cash rate policy in 1999. The bank statement also stated that more rate cuts may be to come if needed as Bollard stated, "Further movements in the OCR will be assessed against emerging developments in the global and domestic economies and the response to policy changes already in place."

tags: rbnz, new zealand, interest rate, kiwi, economy

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