By Lucy Craymer

WELLINGTON (Reuters) -New Zealand’s central bank surprised some in the markets by slashing its benchmark rate by 50 basis points to 2.50% on Wednesday, and kept the door open for further easing, suggesting policymakers were worried about the frail state of the economy.

The New Zealand dollar and interest rate swaps tumbled in the wake of the move, as investors bet on more stimulus in the coming months to shore up demand.

“The Committee reached consensus to reduce the official cash rate by 50 basis points to 2.5 percent,” the RBNZ said in its accompanying policy statement. “The Committee remains open to further reductions in the OCR as required for inflation to settle sustainably near the 2 % target mid-point in the medium term.”

The dovish stance will be a welcome relie

See Full Page