Today’s 0.25% cut in interest rates in New Zealand, to 2.25% from 2.50%, will have been a surprise to most analysts and the financial markets. But as early as July last year we forecast that rates would be cut to 2.0% this year and in the RBNZ Watch we published a week ago we said “there’s a real chance it [the RBNZ] will surprise the market and cut interest rates by 0.25% at the policy meeting on Thursday 10th March”. Interest rates will soon be cut to 2.0% and there’s a real possibility that they will fall below 2.0%.
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