Economists divided on next move for interest rates

On the one hand are signs the global economy is stabilising, the domestic housing market has rebounded and net immigration figures are climbing again.

On the other hand, retail sales remain very depressed - retail sales volumes fell 2.9% in the March quarter, Fonterra's expected milk payments have dropped sharply and the New Zealand dollar has soared well above the central bank's expectations. Longer-term interest rates are also creeping up.

On April 30, Bollard cut his official cash rate (OCR) from 3% to 2.5%, his seventh successive cut since July 2008 when the OCR stood at 8.25%.

Of the 12 economists surveyed by GoodReturns last week, five are expecting no change in the OCR this week, five are expecting a 25 basis point cut to 2.25% and two are expecting a 50 point cut to 2%.