Banks bet on 50pt cut in cash rate

The money markets believe governor Alan Bollard will match the Reserve Bank of Australia's 75-basis-point cut when he reviews the official cash rate on December 4, but some economists are not so sure.

Before the RBA's surprisingly deep cut on Tuesday, the market was looking for a 50-point cut by the New Zealand central bank.

Now it has fully priced in a 75-point cut and sees a decent chance of a repeat of October 23's 100-point cut.

Goldman Sachs JBWere thinks 100 points is eminently justified, but Westpac and the Bank of New Zealand feel the market is getting overexcited.

"We see a 60 per cent probability of 50 points, 30 per cent of 75 points and a 5 per cent chance of either 100 or 25," said BNZ economist Stephen Toplis.

To read the full NZ Herald story, click here

By NZ Herald, 6 November 2008

Posted: 6 Nov 2008

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