With inflation falling, New Zealand's central bank has cut interest rates for the first time in four years, bringing relief to mortgage-holders.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) cut the official cash rate from 5.5 to 5.25 per cent.
"It is so pleasing to be able to make that statement," RBNZ Governor Adrian Orr said, speaking of an "almost emotional" decision.
Analysts were divided on the RBNZ's move but Mr Orr said the call was "not difficult and (made) with full consensus".
It is also a sharp change from the RBNZ's previous guidance - as recently as May - that it may not cut rates until August 2025.
Fresh data in the three months since, including a fall in headline CPI inflation to 3.3 per cent, has prompted the move.
At the core of the RBNZ's decision is the flatlining economy.
Gross domestic product per capita has fallen in each of the past six quarters for a total of around four per cent.
Mr Orr said, "The weakening in domestic economic activity ... has become more pronounced and broad-based".
Revised economic forecasts suggest NZ is experiencing a fresh recession, with Q2 and Q3 in 2024 falling by 0.5 and 0.2 per cent.
Unemployment is 4.6 per cent and rising, tipped to reach 5.3 per cent by the end of the year which would be the highest jobless figure in eight years.
"It is darkest before dawn and I'm suggesting it is basically at dawn at the moment," Mr Orr said.
"A broad range of high-frequency indicators point to a material weakening in domestic economic activity in recent months.
"These include various survey measures of business activity, electronic card transactions, vehicle traffic, house sales, filled jobs, and job vacancies.
"These indicators collectively provide a consistent signal that the economy contracted in recent months."
He also pointed to a number of further risks to the Kiwi economy: below-trend global growth including China, volatility in global asset markets, and risks to the trade and geopolitical environment.
Despite the economic gloom, the rate cuts offer relief at long last for mortgage-holders, with another 25 basis points likely this year.
On social media, Prime Minister Chris Luxon claimed credit for the cut.
"Mortgage relief is on the way because we have delivered lower inflation, with the first OCR cut since March 2020 today," he said.
Told of Mr Luxon's statement during a press conference, members of Mr Orr's monetary policy committee suppressed laughter.
"I would cheekily say, success will always have a thousand fathers," Mr Orr said.
The cut is the first since March 2020, when the OCR was lowered to the emergency level of 0.25 per cent where it sat to late 2021.
As cost pressures mounted due to pandemic-era closed borders and global supply chain shocks, the RBNZ then raised rates through to May 2023, landing at 5.5 per cent.
Following the drop to 5.25 per cent, the NZD dropped by one cent against the USD, while the NZX50 jumped by 1.5 per cent.
A number of lenders moved quickly to pass on the cuts to mortgage rates.
