RBNZ slashes cash rate but warns on slower global growth, trade wars
By Frank Prenesti
Date: Wednesday 19 Feb 2025
(Sharecast News) - New Zealand's central bank slashed its benchmark interest rate by 50 basis points on Wednesday but warned on geopolitical tensions and slower global growth.
The official cash rate (OCR) was cut to 3.75% from 4.25%, adding to 125 basis points in reductions already implemented by the Reserve Bank of New Zealand since the middle of last year.
"Global economic growth is expected to remain subdued in the near term," the RBNZ said in a statement.
"Geopolitics, including uncertainty about trade barriers, is likely to weaken global growth. Global economic activity is also likely to remain fragile over the medium term given increasing geoeconomic fragmentation," it added, referring to US President Donald Trump's plans to hit trading partners with tariffs.
The bank said consumer price inflation remains near the midpoint of its 1 - 3% target band with firms' inflation expectations at target and core inflation continuing to fall towards target midpoint.
"The economic outlook remains consistent with inflation remaining in the band over the medium term, giving the (monetary policy) committee confidence to continue lowering the OCR," it added.
Reporting by Frank Prenesti for Sharecast.com
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