Bollard to cut rates again: economists debate the magnitude

In late January, 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.

Of the 11 economists Good Returns surveyed, four are now expecting a 50 basis point cut, three a 75 point cut and four a 100 point cut to 2.5%.

Deutsche Bank economist Darren Gibbs says a speech by Reserve Bank of Australia governor Glenn Stevens gave to the Australian parliament’s economics committee on Friday hasn’t changed his firm’s view the RBA is likely to leave rates unchanged at its next review on March 3.

If that’s the case, Bollard is unlikely to cut more than 50 points, Gibbs says.