Economists, markets expect a 50bp OCR cut on Wednesday

Economists expect the Reserve Bank will follow the US Federal Reserve's example and cut its official cash rate by 50 basis points to 4.75% on Wednesday, and the markets have nearly priced in a cut of this magnitude, and many have another 50 basis points cut pencilled in for next month two.

At least a couple of economists saying it's a line-ball call whether RBNZ cuts by 25 or 50 points: “Not cutting at all has never entered our minds,” says BNZ head of research Stephen Toplis.

He suggests the magnitude of the cut will come down to how much weight RBNZ decides to put on last week's quarterly survey of business opinion (QSBO) from the New Zealand Institute of Economic Reserach or ANZ's monthly survey which came out the day before the QSBO.

While the ANZ survey indicated businesses are upbeat about the outlook and the QSBO painted a much more miserable picture, Toplis notes the ANZ asks about the outlook one year ahead and the QSBO asks about the next three months.