The Reserve Bank of New Zealand decreases the cash rate by 25 basis points.

The Reserve Bank of New Zealand decreases the cash rate by 25 basis points.
The Reserve Bank of New Zealand decreases the cash rate by 25 basis points.

On Wednesday, the Reserve Bank of New Zealand decreased its cash rate by 25 basis points to 5.25%.

Economists polled by Reuters predicted that the central bank would keep rates unchanged at 5.5%, but the move surprised them.

Since March 2020, the official cash rate has not been cut by the central bank.

The RBNZ stated that consumer price inflation is approaching its target range of 1% to 3%, as surveyed inflation expectations, firms' pricing behavior, headline inflation, and various core inflation measures align with low and stable inflation.

Despite ongoing high service inflation in the country, the RBNZ anticipates a decline in service inflation, with consumer price inflation in New Zealand predicted to remain close to 2% "in the near future."

The central bank stated that the speed of additional easing will be determined by its confidence in a low inflation environment and that inflation expectations are anchored to the 2% target.

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by Lim Hui Jie

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