Understanding the Reserve Bank's Actions

The Reserve Bank of New Zealand has faced significant challenges in managing the economy, particularly in a rapidly changing environment. Recently, the Bank struggled to gauge the economic pace, leading to a delayed response where interest rates were raised even as the economy entered a recession. As of late 2023, the Reserve Bank began to cut interest rates from 3.75%, signaling an urgent need for economic stimulation rather than restriction. The discussion centers on whether a further reduction below 3% is necessary, as the economy continues to need support to recover from a deep recession.