OCR Announcement

We have no particular insight on this morning’s decision other than the insight that economic conditions continue to deteriorate.  But I can observe that if Bollard doesn’t go the full 150% then he will have undershot many expectations out there. 

The key after ths announcement is to ensure that the lower interest rates are passed on quickly to business and household borrowers.  To date the OCR falls have not had that much impact on businesses.  Government should be making clear its expectations on this as a quid pro quo for the guarantees, particularly that on wholesale market borrowings.

Bollard is speaking to our members next week.

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