SYDNEY, April 9, 2025 (BSS/AFP) - New Zealand's central bank cut interest rates on Wednesday citing US trade tariffs, making it one of the first to respond to the economic turmoil sweeping markets worldwide.

"Recent increases in tariffs and uncertainty about global trade policy have weakened the outlook for global economic activity," the New Zealand Reserve Bank said as it cut borrowing costs by 25 basis points to 3.5 percent.

"Against this backdrop, the recently announced increases in tariffs in the United States, retaliation from several trading partners, and heighted geoeconomic uncertainty will have a significant negative impact on global growth," it said.

Cutting the cash rate would help prop-up New Zealand's trade-exposed economy by stimulating domestic spending, it added.

The New Zealand dollar earlier in the day fell below 55 US cents -- its weakest level in around five years.