Economists divided on OCR announcement
Pressure is certainly mounting on Bollard to cut with even Prime Minister John Key saying he expects a cut.
Bollard has held the official cash rate (OCR) steady at 3% since July last year. Some are picking he will slice as much as 50 basis points off it to 2.5% while others think a 25 point cut would be sufficient to bolster confidence.
At the end of last week, the market was taking an each way bet by pricing in about 33 points. A number of banks had also cut their six-month and one-year fixed mortgage rates.
"At a time of national crisis, when the underlying economy is already proving frustratingly weak, a rate cut (of 50 points) would potentially be very helpful to the recovery of the economy," says Jane Turner at ASB Bank.
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