Breaking: RBNZ cuts rates by 50 bps to 1.00%, NZD slumps

At its August monetary policy meeting on Wednesday, New Zealand’s central bank, the Reserve Bank of New Zealand (RBNZ), slashed its Official Cash Rate (OCR) by 50bps to a historic low of 1.00%, a bigger-than-expected cut.

The Kiwi slumped more than a big figure to 10-month lows of 0.6445 on the big rate cut. 

Minutes of the meetings:

Committee agreed larger initial monetary stimulus would best ensure meeting inflation and employment objectives.

The lower OCR path reflected the economic projections and the balance of risks discussed.

Members noted that estimates of the neutral level of interest rates have continued to decline

Committee noted that low business confidence had dampened business investment in 2018 and had remained weak in mid-2019.

Members noted that heightened global uncertainty was reducing investment and suppressing trading-partner growth.

Members noted this highlighted the risk of a larger or more prolonged slowdown in global economic growth.

Committee agreed that the balance of risks to achieving cpi and employment objectives tilted to the downside.

About RBNZ Interest Rate Decision

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.