New Zealand’s central bank lowered its benchmark Official Cash Rate (OCR) by a larger-than-expected 50 basis points to 1.0 percent to boost employment and inflation as “global economic growth continues to weaken, easing demand for New Zealand’s goods and services.”
In May the Reserve Bank of New Zealand (RBNZ) became the first developed market central bank to cut its rate in the current global monetary cycle, and the central bank has now cut its policy rate by a total of 75 basis points this year.
“In the absence of additional monetary stimulus, employment and inflation would like ease relative to our targets,” the RBNZ said, adding “heightened uncertainty and declining international trade have contributed to lower trading partner growth.”
Members of the central bank’s monetary policy committee discussed the relative benefits of lowering the policy rate by 25 basis points now along with an easing bias as compared with cutting the rate by 50 points right away.
In the end, the committee agreed to lower the rate by 50 basis points as it had “agreed that the larger monetary stimulus would best ensure the Committee continues to meet its inflation and employment objectives.”
The Reserve Bank of New Zealand release the following statement:
Summary record of meeting – August 2019 Statement
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