Major uncertainty surrounds official cash rate announcement

Economists says Wednesday's official cash rate (OCR) announcement is hanging on a knife-edge.

The rate has remained unchanged since 2016, but the Reserve Bank signalled a possible cut in March, which could mean good news for exporters and home buyers, but bad news for motorists.

Auckland based company Sleepdrops have been exporting their sleep remedies for the past four years, and a cut to the OCR could signal a chance for them to ramp up those efforts.

"It makes up less than 10 percent currently, because our local market is so strong - but this year is our big drive into international markets," Kirsten Taylor, the company's managing director, told Newshub.

"Because the New Zealand exchange rate is cheaper for our customers, we can negotiate more fiercely on price."

The OCR has remained unchanged on 1.75 percent since November 2016. However, in a surprise move in March, the Reserve Bank said "the more likely direction of our next OCR move is down".

Economists are divided on whether that will happen on Wednesday but Westpac says it's possible.

"[The Government] thought that a pick-up in the economy would push inflation up but it just hasn't happened - they've run out of patience and they think the economy needs a helping hand," Westpac chief economist Dominick Stephens told Newshub.  

Stephens says any cut would likely leave the OCR at 1.5 percent, bringing our dollar and interest rates down with it.

According to Lesley Harris, a spokesperson for The First Home Buyers Club, that change will take some pressure off home buyers, but it's unlikely to be life-changing.

"Unless we saw a huge drop tomorrow - which no one is predicting - I think it could lessen the load by possibly $10 or $20 a week, as opposed to huge amounts of money."

While exporters and home buyers stand to benefit, a cut to the OCR is likely to put more pressure on motorists. Westpac says a drop in our dollar could push up petrol prices, meaning more pain at the pump.