The Reserve Bank has cut the OCR by 50 basis points to 2.5 percent, despite acknowledging inflation is still above where they'd like it.

Finance Minister Nicola Willis says they've factored in broader economic conditions.

She says the central bank clearly thinks any fluctuation in inflation will be constrained by spare capacity in the economy.

Newstalk ZB senior political correspondent Barry Soper says this will come as good news as more people are set to roll into lower mortgage rates.

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