The Reserve Bank of New Zealand cut its benchmark interest rate from 3.0 percent to 2.5 percent to a record low level for the countrys economy.
New Zealand was one of the most punished countries by the global slump due to its commodity exporter economic profile and since July, the central bank has continuously cut the national interest rate from 5.75 percent to the current level of 2.50 percent and lowered taxes in order to ease the damages caused by recession. The New Zealand dollar and bonds have been certainly affected by lowered interest rates, since it obviously becomes less attractive for traders to keep investments in assets that have constant profit decreases.
The economists opinion indicate that the past and present Reserve Bank policy is leaving space for further cuts in the cash rate and that a reversal in this trend is not expected in the foreseeable future. New Zealand is facing its sixth quarter of recession, which immersed the country in the worst crisis for a period of more than 30 years, but even if the interest rates are constantly hitting record lows, they are still more attractive than other major economies rates, such as the Eurozone which is at 1.25 percent and the Japanese which is close to zero.
The NZD/USD remained stable while the NZD/JPY traded at 55.59 from 54.95.
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