The RBNZ has cut the OCR by 25 basis points to 2.25% citing a myriad of concerns particularly around weaker world conditions and lower inflation expectations.

A key concern for the RBNZ is that the inflation outlook looks weaker than when it released its previous Monetary Policy Statement in December.  It says this is due to subdued economic outlook.

The bank forecasts the 90-day interest rates to decline over the first half of this year and then remain low, “consistent with the weak outlook for inflationary pressure.” It forecasts the 90-day rate to fall from 2.8% to 2.1% by the middle of next year then sit at that level for some time.

Banks have been extremely slow to pass on yesterday’s OCR cuts to customers and one that has moved has only passed on 10 basis points.