The economy grew just 0.1% in the June quarter compared with market expectations of 0.5% and the Reserve Bank's latest published forecast of 0.6%.

"The market's completely priced out any tightening (in interest rates) this year - there wasn't much in there anyway," says Darren Gibbs, an economist at Deutsche Bank.

Gibbs is still forecasting Reserve Bank governor Alan Bollard will start raising his official cash rate (OCR), which directly influences floating mortgage rates, from next March but says a lot could happen to push that further out in the meantime.

Gibbs suggests if it's clear interest rates aren't going up, the debate may shift to whether Bollard needs to cut the OCR further from its current 2.5% record low.

"The hurdle would clearly be very high, more than weak data. It would have to be something fairly dramatic."

Stephen Toplis at Bank of New Zealand is also picking March "but with no conviction – there's a much bigger 'if'' there than there normally is."

While short-term interest rates have fallen, the currency has fallen significantly – it had already dropped more than two US cents ahead of the data and has fallen below 80 US cents since.

The overnight fall was in reaction to offshore developments including global markets' scepticism about US Federal Reserve's plans to drive down long-term interest rates to get the US economy growing and a deepening of the European crisis.

Westpac, which had been forecasting 0.7% economic growth in the June quarter, is sticking, at least for now, with its forecast that the next OCR rise will come in January. Chief economist Dominick Stephens describes today's data as "a pothole rather than a renewed broad-based economic slowdown" at this stage.

He is puzzled at such a weak figure "when the broad swath of capacity and confidence measures were clearly tightening," with the labour market also tightening.

Nevertheless, "clearly, there is now less pressure to increase the OCR," Stephens says.