WELLINGTON, Oct 9, 2024 (BSS/AFP) - New Zealand's central bank slashed its key interest rate by half a percentage point Wednesday to its lowest level in 18 months, saying it was nearing a point of "low and stable inflation".

The Reserve Bank of New Zealand lowered the key official cash rate to 4.75 percent, a mark not seen since February last year, but gave little indication about future moves.

The decision was a step to "avoid unnecessary instability in output, employment, interest rates, and the exchange rate", the bank said.

New Zealand's economy has for months teetered on the verge of recession, with consumer sentiment weighed down by high prices, elevated borrowing costs and a housing crisis.

Major banks had already dropped lending rates ahead of the anticipated announcement, while Finance Minister Nicola Willis said "brighter days are ahead" for homeowners and businesses who will now hope to see mortgage payments shrink.