Economic impact of Reserve Bank rate cuts remains uncertain in New Zealand

The Reserve Bank has cut the official cash rate from 5.5% to 4.25% since August. While mortgage rates have decreased, demand for borrowing remains weak due to economic uncertainty. Existing mortgage rates have slightly increased, impacting homeowners. BNZ's chief economist noted that many borrowers will see lower rates in the next six months. However, construction activity continues to decline, and retail sales have contracted significantly over the past two years. Recent increases in retail spending may indicate stabilization. Overall, the economic response to the rate cuts has been mixed. While there are signs of recovery, many challenges remain, and the situation is still evolving.