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 monetary policy committee agreed unanimously to keep the OCR at this level for at least 12 months, the bank said in its statement.
The New Zealand 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.