The Reserve Bank today cut the Official Cash Rate (OCR) by 50 basis points from 5.75 per cent to 5.25 per cent.
Reserve Bank Governor Don Brash said "We are making this unscheduled interest rate cut primarily because of recent
tragic events in the United States.
"It seems more likely now that the current slowdown in the world economy will worsen. In these circumstances, New
Zealand's short-term economic outlook would be adversely affected, although any downturn might well be relatively
short-lived.
"New Zealand business and consumer confidence will be hurt by recent international and domestic developments, and
today's move is a precaution in a period of heightened uncertainty.
"Our focus, as always, is to keep core inflation in check. Our present judgement is that interest rates do not need to
be as high as previously to achieve this," Dr Brash concluded.
The next scheduled review of the OCR is on Wednesday 3 October.
Ends