The Reserve Bank's decision to leave the OCR on hold, while signalling it will make a cut later, has had a major impact on the markets.
The Kiwi fell close to one cent following the announcement,
while short term interest rates - which can influence mortgages
rates - fell around 20 to 25 basis points.
The market is now pricing a 50% chance of an interest cut as early
as July
Analysts say the signal of a cut came as a surprise and suggests
the Reserve Bank has shifted its stance and is now more concerned
about weakness in the economy, than the inflation outlook over the
medium term.
It is also at odds with the OECD's latest report on the New
Zealand economy
The report says that an easing of interest rates should be possible
next year. However it says the recent tax cuts announced in the
budget are a good use of the surplus.
It also warned New Zealand economy was vulnerable due to its heavy debt.
