The RBNZ cut the official cash rate by 50 basis points to 2.5%. This wasn’t to surprising. However, the statement was a hell of a lot more dovish than I expected, especially:
We expect to keep the OCR at or below the current level through until the latter part of 2010.
So the RBNZ is stating that it will leave the OCR at or below 2.5% until LATE-2010. That is a commitment to expansionary policy for quite sometime. In that case, the RBNZ’s outlook for economic activity must have deteriorated substantially for late 2009 and 2010.