RBNZ cuts cash rate by 50bp, as widely expected

Reserve Bank of New Zealand cash rate dropped to 4.75% from 5.25%,

The 50bp cut was widely expected.

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Statement summary points:

• New Zealand is now in a position of excess capacity.
• Low import prices have assisted disinflation.
• The committee assesses annual consumer price inflation within its 1-3% target.
• It is appropriate to cut the OCR by 50 bps to achieve and maintain low and stable inflation.
• Business investment and consumer spending have been weak, and employment conditions continue to soften.
• Geopolitical tensions remain a significant headwind for world economic activity.
• New Zealand’s economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy.

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This article was written by Eamonn Sheridan at www.forexlive.com.