Interest rates cut - Will stay low till 2010

Reserve Bank governor Alan Bollard has cut official interest rates again, this morning taking a full half of one percent off the official cash rate. Since January this year the OCR has been the lowest in its 10 year history and today's cut takes it from 3 per cent to a new record low.

Economists and the financial markets have been in two minds, about whether Bollard would cut the OCR by 25 or 50 basis points.

"Overall, developments since March point to lower medium-term inflation than previously projected. The main factors behind this are weaker global growth, and an unwarranted tightening in financial conditions via both higher long-term interest rates and a stronger exchange rate than expected," said Bollard this morning.

Westpac Bank has moved quickly in response to the OCR cut, saying it was cutting its 6 month home loan rates by 0.4 per cent.

This brings its 6 month home loan rate to 5.39 per cent, due to come into effect this Friday.

The New Zealand dollar plunged nearly US1c immediately after the OCR announcement from US57.34c to US$56.46c before recovering slightly.

To read the full NZ Herald Article click here

Posted: 30 Apr 2009

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