Categories: Local NewsTop Stories

New Zealand makes disproportionate cuts to try to boost growth

The Reserve Bank of New Zealand (RBNZ) building in Wellington, New Zealand on Wednesday February 22, 2023.

Mark Coote | Bloomberg | Getty Images

New Zealand’s central bank on Wednesday cut its benchmark interest rates by 50 basis points to 2.5%, taking the policy rate to its lowest level since July 2022 as concerns over growth loom.

The cut in the overnight policy rate was more than the 25 basis points expected by economists polled by Reuters.

In its statement, the Reserve Bank of New Zealand said inflation was expected to return to its 2% target by the first half of next year, while pointing to weak economic activity in mid-2025, justifying a steeper rate cut.

“Slow growth in disposable income and house prices continues to weigh on economic activity, but lower interest rates are supporting a recovery in consumption,” the bank said.

New Zealand’s GDP contracted more than expected in the second quarter, down 1.1% year-on-year, compared with a 0.9% decline estimated by economists polled by Reuters.

“This partly reflects domestic constraints on the supply of goods and services in certain industries, as well as the impact of uncertainty on global economic policy.”

The RBNZ also discussed the impact of trade restrictions and tariffs, and said global trade volumes and economic activity had so far proven resilient.

Growth forecasts for 2025 have improved for New Zealand’s trading partners, particularly China, Taiwan and some other Asian economies, although growth is expected to slow in 2026, the RBNZ said.

The World Bank on Tuesday raised its growth forecast for China for 2025, amid an overall improvement in projections for East Asia and the Pacific. The World Bank now projects that China’s economy will grow 4.8%, up from 4% forecast in April.

On the domestic front, domestic inflationary pressures continued to moderate, giving the RBNZ greater confidence in containing inflationary pressures, the bank said.

Headline inflation stood at 2.7% in the second quarter, near the top of the RBNZ’s 1% to 3% target range.

Source link

Daniel White

Daniel White – Breaking News Editor Delivers fast, accurate breaking news updates across all categories.

Recent Posts

Collect supermoon photos: See the moon at its largest and brightest in photos from around the world

The Super Harvest Moon is the first of three supermoons in 2025. Here, it is pictured rising behind the Statue…

26 seconds ago

What’s Fixed in the October 2025 Pixel Update Detailed by Verizon

Google has yet to release the October 2025 Pixel Update, but details of Verizon's upcoming OTA are now available. The…

2 minutes ago

Police publish a new video to refute the complaint of the lawyer in a fatal accident involving Kyren Lacy

Police from the state of Louisiana has published a new video of the car accident involving LSU football player Kyren…

3 minutes ago

Jimmy Fallon wants to turn Wordle into a TV show

Jimmy Fallon helps make Word in a television series, Deadline reports. NBC is piloting the Word game show with the…

4 minutes ago

Sean “Diddy” Combs: sentencing

A judge on Friday sentenced Sean “Diddy” Combs to 50 months in prison – just over four years – for…

5 minutes ago

The BJP, the RSS and the EC engage in “Chori vote” in India, alleges Rahul Gandhi at the Bihar rally

Congress chief Rahul Gandhi criticized the NDA government on Saturday, August 30, at the Center for the special and intensive…

6 minutes ago