Today's cut in the Official Cash Rate (OCR) should help exporters and the economy, Finance Minister Bill English says.
The Reserve Bank today cut the rate for the first time in more than four years, from 3.5 percent to 3.25 percent.
Opposition parties said the bank had been forced to act to stimulate the economy - and there are warnings lower interest rates will inflame an already overheated Auckland housing market.
However, Mr English said that would not happen, because other measures already in place, such as the new property tax, should dampen demand.
He said the OCR cut should also bring the exchange rate down, benefiting exporters.
Mr English said, as a result, he expected economic growth of 2.5 to 3 percent in the next few years.