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Coronavirus impact: New Zealand's central bank cuts interest rate to 0.25%

The unexpected move came ahead of its scheduled policy decision meeting on March 25.

Reuters 

Coronavirus
The negative impact from the virus on New Zealand's economy is, and will continue to be, significant

The Reserve Bank of (RBNZ) slashed its official cash rate (OCR) by 75 basis points on Monday, in response to growing concerns over the outbreak.

The unexpected move came ahead of its scheduled policy decision meeting on March 25.

The bank cut the official cash rate to 0.25%. The agreed unanimously to keep the OCR at this level for at least 12 months, the bank said in its statement.

The dollar fell 1.4% after the announcement.

"The negative economic implications of the COVID-19 virus continue to rise warranting further monetary stimulus," the bank said.

The negative impact from the virus on New Zealand's economy is, and will continue to be, significant, it said.

The Committee also agreed that should further stimulus be required, it prefers to undertake large-scale asset purchases of government bonds rather than cut the OCR further.

The bank however said New Zealand's financial system remains sound and major financial institutions are well capitalised and liquid.

First Published: Mon, March 16 2020. 03:12 IST
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