Official Cash Rate (OCR) slashed by 1.5%

Today the Official Cash Rate (OCR) was slashed by 150 base points (1.5%) from 6.5% down to 5% by the Reserve Bank Governor Allan Bollard.

There has been speculation over the past week with many initially expecting a drop of 100 base points. In the last few days the common expectation appeared to have shifted to a likely 150 base points which puts interest rates at a 5 year low.

The move has broken records for the largest drop since the OCR was introduced in 1999.

Banks have started to reduce their interest rates accordingly with Alan Bollard directly pushing for this outcome quickly;

“To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers.”