OCR cut to boost market

On Wednesday the Reserve Bank’s Monetary Policy Committee (MPC), which is led by the bank’s governor Adrian Orr, cut the OCR to a record low of 1.5%, after it spent the last two years on hold at 1.75%.

Not so long ago, most economists were saying the OCR had troughed and its next move was likely to be up. Yet yesterday’s cut did not come as a surprise.

That’s because in March, at the last OCR call, Orr shifted to an easing bias, saying the next OCR move was "likely to be down" due to slowing domestic and global growth.

Those factors didn’t end up changing and the MPC decided a lower OCR is necessary to support the outlook for employment and inflation as consistent with its policy remit.