WELLINGTON, Oct. 10 (Xinhua) -- The New Zealand central bank reduced monetary restraint by cutting its Official Cash Rate (OCR) by 50 basis points to 4.75 percent, the lowest in 18 months.
The Reserve Bank Monetary Policy Committee assessed that annual consumer price inflation is within its 1 percent to 3 percent inflation target range and converging on the 2 percent midpoint.
The committee agreed that it is appropriate to cut the OCR by 50 basis points to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate.
Economic activity in New Zealand is subdued, in part due to restrictive monetary policy. Business investment and consumer spending have been weak, and employment conditions continue to soften, the committee said in a statement.
The New Zealand economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy. Lower import prices have assisted the disinflation, it said.■