The Reserve Bank of New Zealand cut its interest rate by 50 basis points on Thursday as inflation remained near the mid-point of the target band.
The Monetary Policy Committee of the Reserve Bank of New Zealand, led by Governor Adrian Orr, decided to lower the rate to 3.75 percent from 4.25 percent.
Policymakers observed that inflation remained near the mid-point of the 1-3 percent target band.
In the near-term, inflation is likely to be volatile due to a lower exchange rate and higher petrol prices. However, the net effect of future changes in trade policy on inflation is currently unclear, policymakers noted.
Economic activity remained subdued. The bank expects growth to recover this year as lower interest rates support spending. Moreover, higher prices for some commodities and lower exchange rate lift export revenues, the committee observed.
"If economic conditions continue to evolve as projected, the Committee has scope to lower the OCR further through 2025," the bank said.