By Lucy Craymer

WELLINGTON (Reuters) -New Zealand’s central bank cut its policy rate by 25 basis points to a three-year low of 3.00% on Wednesday, and flagged further reductions in coming months as policymakers warned of domestic and global headwinds to growth.

The New Zealand dollar fell as much as 1.2% to a 4-month low at $0.5829, while two year swap rates slumped as deep as 2.96% — their lowest level since early 2022 — as the decidedly dovish stance caught markets off guard.

The Reserve Bank of New Zealand said the economy had stalled in the second quarter, and lowered its projected floor for the cash rate to 2.55%, from 2.85% forecast in May. Two members of the six-strong policy committee even voted to cut by 50 basis points on Wednesday.

The quarter point cut in the official cash

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