UPDATED 10.25AM: The Reserve Bank has chopped 25 basis points off the Official Cash Rate.
It's now 2 percent, which is a new record low.
Traders and economists had been expecting a cut.
The central bank last dropped the rate back in March, by 25 basis points.
MORE: Andrew Dickens: OCR cut expected - how will it affect you?
EARLIER TODAY: Reserve Bank expected to cut OCR
Graeme Wheeler isn't ruling out the possibility of further cuts in the future.
"The prospects for global growth and commodity prices remain uncertain, political risks are also heightened."
Mr Wheeler is sending fresh signals about moves it may take to curtail house price inflation.
He's alluded to debt to income restrictions during his announcement of the OCR cut.
He said house price inflation remains excessive and has become more broad-based across the regions, adding to concerns about financial stability.
Mr Wheeler said the bank's consulting on stronger macro-prudential measures that should help mitigate risks from rapidly rising house prices.
An economist sees this morning's rate cut as an effort to increase inflation.
ASB chief economist Nick Tuffley said inflation is still very low, and it's likely to be a long time before it climbs back up.
He said the Reserve Bank is eyeing up the need for further cuts, aiming to raise inflation to a more comfortable level.
Green Party finance spokeswoman Julie Anne Genter said a lack of Government action had meant an OCR cut was unavoidable.
“The critical earning part of our economy - the export and import-competing sectors - are under significant pressure from the high New Zealand dollar.
“The Governor called house price inflation excessive and raised the stakes of a major shock to the economy should house prices correct. National’s failure to stop housing speculation and build enough affordable homes is making the wider economy more vulnerable to damaging economic shocks.”
Green Party policy is to introduce a capital gains tax that excludes the family home, and ban foreigners from buying land.
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