The governor of the Reserve Bank today announced the reduction in the Official Cash Rate (OCR) by 25 basis points to 2.75 percent.

The reduction is warranted by the softening in the economy and the need to keep future average CPI inflation near the 2 percent target midpoint. The governor also advised that some further easing in the OCR seems likely depending on the emerging flow of economic data.

HLANZ comment: This reduction has been factored in by some banks that reduced some of their rates last week. The response of the remaining banks will be interesting over the next few days.