The New Zealand dollar rises after the decision to cut interest from the Bank of New Zealand
The Reserve Bank of New Zealand cut the official interest rate by 25 basis points to 3.5% for the fifth consecutive meeting, due to low inflation and weak domestic economic conditions.
Minutes of the meeting of the Reserve Bank of New Zealand:
- If economic conditions continue to develop as expected, the committee will have room to reduce the interest rate until the end of Year.
- As the scope of tariffs becomes clear, the committee will have room to reduce the official interest rate even more.
- Global trade barriers weaken the prospects for global growth, and cause negative risks for the New Zealand economy.
- The presence of the consumer price index near the middle of the range puts the committee in the best position to respond to developments.
- Future policy decisions will be determined based on forecasts of inflationary pressures in the medium term.
- The committee noted that previous cuts in the official interest rate have not yet achieved their full impact on the economy.
It is worth noting that the Reserve Bank of New Zealand has lowered the interest rate by 200 basis points since it started this cycle in August last year.
- The central bank warned of negative risks to New Zealand's export-dependent economy as a result of global trade barriers.
- The Bank of New Zealand left the door open for further cuts during upcoming meetings, saying that the tariffs imposed by US President Donald Trump are a significant burden on global growth and their impact will be extended domestically.
New Zealand is in the crosshairs of the rapidly escalating trade war between the United States and China.
