Economists had expected the central bank to deliver a third consecutive big cut, in a bid to support the weak economy.
The ANZ and BNZ banks had already announced they would cut their interest rates ahead of today’s decision.
Economists have suggest future cuts to the benchmark interest rate would be smaller, fewer and spread out.
The next update was scheduled for April 9.
Good news for Kiwis: Willis
Finance Minister Nicola Willis said the RBNZ’s positive economic outlook indicates the economy is growing and people can look forward to more jobs and opportunities.
“This is good news for New Zealanders. A growing economy means more money in people’s pockets, more jobs and more opportunities,” she said in a statement this afternoon.
“The government knows many families and businesses are doing it tough, but evidence is mounting that they can look forward to better times.
“Today’s reduction in the Official Cash Rate is the fourth since August last year and confirms inflation is firmly back under control.”
Willis said the OCR had fallen 1.75 points since August to 3.75% and further reductions would put more downward pressure on interest rates.
“That is good news for businesses as well as families. More money in people’s pockets means more money flowing through tills.”
She said there were signs that was already happening.
“Business and consumer confidence are both trending upwards and last week the BNZ and Business NZ reported that growth in manufacturing had risen to its highest level since September 2022.
“After a period of decades-high inflation, high interest rates and cost-of-living pressures, the economy is heading in the right direction.”
Admission of failure, says union
But Taxpayers’ Union Spokesman James Ross called today’s rate drop “an admission of failure by the Reserve Bank Governor.”
“The Reserve Bank being too slow off the mark to cut interest rates has driven the country into the worst economic downturn in three decades. With more than two-and-a-half times the staff now than the Bank had in 2018, clearly too many cooks spoiled the broth.”
Ross said to get out of recession, there needed to be serious growth.
“That means attracting investment, and the corporate tax reforms to fuel it.
“With Budget 2025 just around the corner, now’s the time for Nicola Willis to be drafting plans for a pro-growth agenda, including high bang-for-buck policies like full capital expensing.”
– APL and RNZ
