The Official Cash Rate axe has swung again, with Reserve Bank Governor Alan Bollard cutting official interest rates by 150 basis points - a 1.5 per cent cut leaving the rate at 5 per cent.
A cut of this scale would have been unimaginable just 12 months ago, but the past year has been one that few but the gloomiest of pessimists could have expected. The current OCR is 6.5 per cent.
Today's cut of 150 basis points is, said ASB economist Nick Tuffley, ""the past of least resistance", since it was widely expected by the market.
A 1.5 per cent cut could mean the bank was 'concurring implicitly with the market view that the global economy and impact on NZ will be so severe that rapid action is necessary - and likely to be aggressively followed up.
It will be interesting to see how quickly the banks heed Bollard's message, and start to pass on some meaningful interest rate cuts to customers - especially business customers.