New Zealand’s tanking economy has pushed the central bank into a second-consecutive double-strength 50 basis point interest rate cut.

The official cash rate (OCR) has dropped from 4.75 per cent to 4.25 per cent, as the Reserve Bank of New Zealand (RBNZ) charts a course downwards.

To tame inflation, the RBNZ held the OCR at 5.5 per cent for more than a year before a 25 basis point cut in August began this cutting cycle.

The consumer price index back is around the midpoint of its target band, last measured at 2.2 per cent in the year to September.

And the economy desperately needs the boost, given GDP fell by 0.2 per cent in the past year.

RBNZ Governor Adrian Orr said “economic activity in New Zealand remains subdued and output continues to be below its potential”.

“If economic conditions continue to evolve as projected, the (RBNZ) expects to be able to lower the OCR further early next year,” he said.

This post was originally published on Michael West.