New Zealand offers major discounts in an attempt to enhance growth

On Wednesday, the New Zealand Bank reduced standard interest rates by 50 basis points to 2.5 %, bringing the interest rate to its lowest level since July 2022 with concerns about growth.

The reduction in the interest rate for one night was greater than 25 basis points expected by the economists whose Reuters polled.

In its statementThe New Zealand Reserve said that inflation is likely to return to its 2 % goal by the first half of next year, while indicating twice the economic activity in mid -2025, which calls for a sharp reduction in interest rates.

The bank said: “Slow growth in available income and home prices still affects economic activity, but low interest rates supports consumption recovery.”

GDP in New Zealand The economy shrinks more than expected in the second quarter, a decrease of 1.1% on an annual basis compared to a decrease of 0.9% in economists, Reuters polled their opinions.

“This partly reflects the local restrictions on the supply of goods and services in some industries, and the impact of uncertainty in global economic policy.”

The New Zealand Reserve also discussed the impact of commercial restrictions and customs tariffs, and said that global trade volumes and economic activity have proven their flexibility so far.

The New Zealand Reserve said that the growth forecast for 2025 has improved for New Zealand’s commercial partners, especially China, Taiwan and some other Asian economies, although growth is expected to slow in 2026.

World Bank on Tuesday She raised her forecast for growth for 2025 For China as part of the comprehensive reinforcement of the East Asian and Pacific expectations. The World Bank is now expecting the Chinese economy to grow by 4.8%, compared to 4% expected in April.

On the internal front, local inflationary pressures continued in moderation, which gave the New Zealand Reserve Bank more confidence in inflationary pressures, the bank said.

The main inflation rate was 2.7% in the second quarter, near the maximum range targeted by the New Zealand Reserve, which ranges between 1% and 3%.