The Reserve Bank has cut the official cash rate to 5.25 percent.

Expectations had been rising the central bank might cut the rate for the first time in four years.

Wholesale interest rates have been falling recently as financial markets surmised the rate might fall for the first time since March 2020.

The Reserve Bank started increasing the cash rate in late 2021 in response to high inflation, with the OCR reaching its current peak of 5.5 percent in May last year.

However, in recent months, economic data shows inflation slowing, unemployment rising and economic growth stalling.

A Reuters poll of 31 analysts showed 19 expected the cash rate to be held steady.