Prime Minister Christopher Luxon and Finance Minister Nicola Willis say the government's actions have help slow inflation, which led to the Reserve Bank's 25 basis point cash rate cut.
The first reduction in the cash rates in more than four years, it has led commercial banks to start cutting their interest rates almost immediately.
However, it has not been received well by some economists, who criticised it as a significant shift from RBNZ's previous statements.
Willis said she was very confident when releasing the Budget her tax relief package had not added to inflation, due to advice she received from Treasury.
"We owe to New Zealanders discipline and better value for the money we spend on their behalf ... every New Zealander who loses a job is a New Zealander that I worry about," she said.
Luxon blamed the economic difficulties on the previous Labour government.
"Essentially, poor economic management and financial discipline created rampant domestic inflation and therefore rising interest rates, which have squeezed family and farm budgets. And that squeeze has driven the country into recession and our unemployment is understandably rising," he said.
He credited the government's removal of the Reserve Bank's previous mandate to consider effects on employment, the reintroduction of 90-day trials and the cancellation of the so-called fair pay agreements legislation as contributing to price stability.
The signs of economic recovery were "encouraging, albeit early", he said. He was not listening too much to the numbers because he the country felt like it was in recession.
"Talking to New Zealanders up and down this country, we are in recession, it feels like a recession, it is a recession for them, so that's very much our next focus is for right now we have to get interest rates on a downward path and we have to get economic growth into the joint."
In an earlier written statement, Willis said Reserve Bank's decision showed it had confidence inflation was under control "and the era of extreme price increases is over".
"New Zealand has been suffering an acute cost-of-living crisis since the middle of 2021, with weekly food budgets stretched thin, mortgage repayments high and confidence in our living rooms, offices and boardrooms low," she said.
Nicola Willis Photo: RNZ / Samuel Rillstone
She took some credit for the economic shift.
"This government has delivered on its promise to Kiwis - our careful and deliberate plan to get on top of inflation is working, and we are seeing the green shoots of recovery."
But Labour's finance spokesperson Barbara Edmonds said there was bad news as well as good news.
While the cash rate cut would ease cost of living pressures, economic growth was slower than expected and unemployment was set to hit a higher peak of 5.4 percent, she said.
"It is a fine line to balance, and we are still concerned that the tax cuts will be inflationary with the Reserve Bank saying 'the net effect of government spending reductions and income tax cuts on inflationary pressure is uncertain.
"A tiny celebration is not worth the thousands of jobs lost, and the recession forecast to come. The government must do more - it's actively making this situation worse."
The Green Party said the government's policies were driving poverty in the community, with co-leader Chlöe Swarbrick saying the Reserve Bank's decision would be welcome news for some, "but won't help the approximate 23,000 more kids the government is pushing into poverty".
"This government is actively pursuing policies shown to enhance hardship and grow poverty. They're making thousands unemployed while simultaneously cutting support for those without work and threatening them with sanctions. Benefit sanctions are a tried, tested and failed policy."
She said the RBNZ's monetary policy approach was a blunt instrument, and fiscal policy - the government's choices on tax and spending - were what defined the winners and losers of the economy.
"It beggars belief that of all the issues in front of us, this government has chosen to focus on making life harder for those struggling to get by. But of course, the prime minister didn't think to check the average beneficiary's income before pursuing the anti-evidence, punch-down policy."