The Reserve Bank has cut the Official Cash Rate (OCR) to 0.25 per cent for the next 12 months amid the coronavirus outbreak.
New Zealand's economy, particularly the tourism sector, is being hit hard by the coronavirus outbreak.
Global markets including New Zealand's sharemarket suffered heavy losses last week.
With a low OCR typically comes low interest rates for borrowers but less gains for people with savings in the bank.
The official cash rate has dropped from one per cent to .25 per cent in a bid to boost the economy. (Source: Other)
"The negative economic implications of the Covid-19 virus continue to rise warranting further monetary stimulus," the Reserve Bank says.
"Since the outbreak of the virus, global trade, travel, and business and consumer spending have been curtailed significantly.
Our dollar hit a 10-year low overnight and markets opened four percent down but experts are advising to keep calm and carry on. (Source: Other)
"Increasingly, governments internationally have imposed a variety of restraints on people movement within and across national borders in order to mitigate the virus transmission.
"Financial market pricing has responded to these events with declining global equity prices and increased interest rate spreads on traditionally riskier asset classes.
"New Zealand’s financial system remains sound and our major financial institutions are well capitalised and liquid. The Reserve Bank is also ensuring that the banking system continues to function normally."
Prime Minister Jacinda Ardern is expected to announce a significant coronavirus relief package tomorrow.
On February 12 the Reserve Bank left the OCR unchanged at one per cent, the record low level it had been changed to in August 2019.
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