Reserve Bank likely to cut rates again

  • 23/07/2015
Reserve Bank likely to cut rates again

Economists rarely agree, but they are unanimous in their view that the Reserve Bank will cut interest rates for the second time in six weeks.

All 15 economists polled by Reuters believe Governor Graeme Wheeler will trim the official cash rate, which sits at 3.25 percent, by at least 25 basis points at 9am today. Some think he may go further.

Last month Mr Wheeler trimmed 25 basis points off the rate to impose the first cut to the OCR since January 2011.

That came on the back of low inflation and weakening demand, but since then dairy prices have continued to slide, Chinese markets have slumped and the Greek crisis had shaken global confidence.

Domestic business and consumer confidence have dropped to their lowest levels in three years.

BNZ, which on Wednesday cut its milk price forecast for the coming season to $3.80 per kilogram of milksolids, said dairy sector weakness and uncertainty warranted the cut.

Westpac chief economist Dominick Stephens said he expected Thursday's statement accompanying the rate cut would use strong language to describe the likelihood of more moves downward.

It is forecasting the OCR to fall by 2 percent by December.