The Reserve Bank today reduced the Official Cash Rate another quarter of an extraordinarily low 1.75%.
But, reports are the cuts is unlikely to be reflected in mortgage rates, often a stimulus for people to spend on vehicles.
That may be balanced by cheaper money sourcing for other lending.
The move is largely about maintaining the dollar and growth.
“Weak global conditions and low interest rates relative to New Zealand are keeping upward pressure on the New Zealand dollar exchange rate,” the Reserve Bank says in its statement announcing the cut. “The exchange rate remains higher than is sustainable for balanced economic growth and, together with low global inflation, continues to generate negative inflation in the tradables sector. A decline in the exchange rate is needed.”
“Domestic growth is being supported by strong population growth, construction activity, tourism, and accommodative monetary policy. Recent dairy auctions have been positive, but uncertainty remains around future outcomes,” it explains. “High net immigration is supporting growth in labour supply and limiting wage pressure.”
It says house price inflation remains excessive and is posing concerns for financial stability.
