In an emergency announcement this morning the Reserve Bank has cut the official cash rate to 0.25% in response to the COVID-19 situation. This is bigger than the expected 50 basis point cut predicted by ASB economists.
"Since the outbreak of the virus, global trade, travel, and business and consumer spending have been curtailed significantly. Increasingly, governments internationally have imposed a variety of restraints on people movement within and across national borders in order to mitigate the virus transmission. " The Reserve Bank said in the statement released this morning.
"The negative impact on the New Zealand economy is, and will continue to be, significant. Demand for New Zealand’s goods and services will be constrained, as will domestic production. Spending and investment will be subdued for an extended period while the responses to the COVID-19 virus evolve. "
We should soon start to see the effect of this reduction as mainstream banks review their interest rates.
You can read the full statement on the Reserve Bank website.