New Zealand`s central bank cut interest rates for the first time in more than four years on Thursday, trimming the base rate 0.25 points to 3.25 percent amid lower-than-expected inflation.
The Reserve Bank of New Zealand moved to stimulate the economy after annual inflation for the year to March 31 came in at 0.1 percent, a 15 year low.
The last time the bank cut interest rates was in March 2011, to prevent the economy faltering after a devastating earthquake in Christchurch.
It cited sharp falls in commodity prices, particularly dairy, as one of the factors behind the latest move.
"A reduction in the OCR (official cash rate) is appropriate given low inflationary pressures and the expected weakening in demand, and to ensure that medium term inflation converges towards the middle of the target range," it said in a statement.
The bank`s target inflation rate is 1.0-3.0 percent.
The rate cut had been tipped by some economists, although most market watchers believed the bank would leave rates on hold.
The bank lifted rates by 1.0 percent to 3.5 percent between April and July last year amid signs the economy was overheating.
It was seen as reluctant to cut rates for fear of fuelling runaway property prices in the country`s biggest city Auckland.
However, the bank introduced loan restrictions last month that it said should help cool the city`s housing market.
