New Zealand shares climbed on Wednesday after the central bank slashed its key rate by half a percentage point in a move widely expected by economists.

The S&P/NZX 50 Index gained 1.8%, or 220.1 points, to close at 12,776.13. The rally followed the Reserve Bank of New Zealand's decision to cut the official cash rate by 50 basis points to 4.75%.

In announcing its decision, the central bank said annual consumer price inflation is now converging on the 2% midpoint of its 1% to 3% target. The Monetary Policy Committee also said the move is needed "to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate."

In corporate news, Pacific Edge's (NZE:PEB, ASX:PEB) shares fell more than 3% at market close after the cancer diagnostics company reported that tests processed at its laboratories in the three months to September were 2% lower than the prior quarter at 7,045.

Cooks Coffee (NZE:CCC) reported group sales of NZ$33.8 million in the first six months of fiscal 2025, representing a 26% increase.