Wellington - New Zealand's central bank cut its benchmark interest rate by an unprecedented 1 per cent to 6.5 per cent on Thursday, its third cut in 13 weeks after making no reductions for five years.

The Reserve Bank had cut its Official Cash Rate (OCR) to 8 per cent on July 24 after keeping it at 8.25 per cent - one of the highest in the developed world - for 12 months and reduced it again to 7.5 per cent on September 11.

The 1 per cent cut had been widely anticipated by analysts despite this week's revelation that the inflation rate had hit an 18-year high of 5.1 per cent - well over the bank's maximum target of 3 per cent. (dpa)