First NZ interest rate cut for five years
Updated
New Zealand's central bank has cut official interest rates by a quarter of one per cent, to eight per cent - the first drop in five years.
The bank says the cut is justified by a rapidly slowing New Zealand economy, despite strong inflationary pressures.
The Reserve Bank governor, Alan Bollard, says further interest rate falls are likely.
Mr Bollard has told the New Zealand Herald, continuing price pressures will see inflation reach an expected high of around five percent in the September quarter.
But he expects it to return to the central bank's target range of one to three percent, in the medium term.
