The Reserve Bank cuts the OCR

Radio NZ reports:

The Reserve Bank’s decision to cut the official cash rate by 25 basis points makes it hard to figure out what to trust of what it says, one senior economist says.

The bank cut the rate to 5.25 percent on Wednesday.

While that was predicted by some economists, it is a significant change from the last full update from the bank in May, when it said its monetary policy committee had discussed the prospect of another interest rate increase – and it did not expect to cut until this time next year.

Infometrics chief economist Brad Olsen previously said “heads should roll” if a cut happened this week, given the economy had progressed much as the Reserve Bank was expecting it to when it forecast no cut until 2025.

I thought the Reserve Bank should wait as non-tradable inflation was still high and also the Australian inflation rate increased in Q2. Hopefully the Reserve Bank is right in cutting now, and despite this inflation will track down to 2% (or lower).