Kiwibank slashes 2-year lending rate

Kiwibank acted within the hour of a Reserve Bank rate statement today to slash a key lending rate.

The state-owned bank said it was cutting its two-year lending rate to 9.29 per cent from 9.60 per cent with the proviso that borrowers have 20 per cent equity in their purchase.

Other bank two-year rates are mostly around 9.60 per cent although BNZ's rate is at 9.50 per cent.

Reserve Bank Governor Alan Bollard left official interest rates unchanged today as expected, but his statement was seen as a softening of his hardline anti-inflation stance as he acknowledged the economy had slowed faster than anticipated.

Kiwibank chief executive Sam Knowles told NZPA that after Dr Bollard's statement his bank was able to put a "fairly aggressive rate in the two-year space".

"He was effectively signalling that rates will come down at some point, although not in the shorter term," Mr Knowles said.

"It's all very subtle stuff. He took away the word `significant' and that made the difference in the sense of saying there is a chance rates will be coming down.

"That's really just confirmed the way the market is thinking anyway."

- NZPA