Bollard slashes rates citing global recession

Bollard cut his official cash rate (OCR) from 5% to 3.5%, saying the global economy is now in recession. He has progressively cut the OCR from 8.25% since July last year.

"I wouldn’t have been gob-smacked if he had moved 200 (basis points)," says Brendan O’Donovan, chief economist at Westpac, who was one of the few predicting a 150 point cut.

"With the severity of the situation New Zealand’s facing, it would’ve made no sense not to front up. He’s fully justified in going 150 and there was even a case for something larger," he says.

O’Donovan says he’s still picking the OCR will trough at 2.5% "but let’s just wait and see where the data runs."