WELLINGTON, New Zealand (AP) — New Zealand’s central bank has cut its benchmark interest rate to an all-time low of 1% as it forecasts tougher economic conditions ahead.
The cut of half a percentage point by the Reserve Bank was a surprise with most economists forecasting a rate cut of 0.25%.
The Reserve Bank said employment was near the maximum sustainable level while inflation remained below the midpoint of its target range.
Bank Governor Adrian Orr said in a statement Wednesday that economic growth had slowed over the past year while economic headwinds were rising. He said that employment and inflation would likely fall without additional monetary stimulus.
The New Zealand dollar fell by about 2% on the news and was trading at a little over 64 cents.
