OCR Cut to 3%

In a bid to stimulate the economy, the Official Cash Rate has been cut again this morning to 3%. This takes it down by 50 basis points from the previous 3.5%, the third cut in less than four months.

Reserve Bank Govenor Allan Bollard has noted that the 525 basis points in which the OCR has been reduced in the last 6 months is taking interest rates to very stimulatory levels. While credit growth is easing alongside the weak economy, the RBNZ expects lenders to continue pushing financial loans through on sound business propositions, which will support the economy’s recovery.

Additionally, the changes in monetary policy settings and stimulus from fiscal policy, together with the sizeable exchange rate depreciation, will act to further support the NZ economy. Bollard hopes to see activity gradually picking up after the middle of 2009.