A few thoughts from Thursday 12 March statement:

A quick snapshot:

July 2008 OCR @ 8.25%
Mar 2009 OCR @ 3.00%

Dr Bollard has indicated that they've not finished with the cuts, although expects them to be smaller in future, perhaps back to 25bps. When asked about the influence of the RBA on his decision (given that they'd held
rates) He replied, "it's good to have some gutsy Central Banks around". Dr Bollard is also aware that NZ's interest rates need to remain competitive in order to attract overseas investment (help fund Current Ac Deficient and supply funding to NZ market), so he's not going anywhere near zero.

There were comments that often after a recession there is a year of strong growth, this often doesn't last. Almost seems like a false bounce. Hey I say I year of growth after this environment is to be welcomed, although one should be mindful of this phenomenon. I think NZ & Australia are better placed to weather this storm as we have stuck to traditional methods of business and trade. Banks are in a sound position. Unlike the experiences of the USA & UK.

As many Economists have been saying over the last couple of years, given NZ's primary exports revolve around food, hey the world's got to eat...
Demand for our goods will come back.

The impact on the NZD, kiwi was trading around 0.5068 before the announcement and given the wide variety of expectation of cuts from 50 - 100 bps, the kiwi has bounced back to around 0.5120, encouraged by a smaller rate cut.

This may assist the NZDAUD cross, though we now have lower rates than the Aussies... Their Target Cash Rate is now 3.25%, Premium favouring Australia now unfortunately. Will see whether they hold on their next rate review.

I do wonder whether Bollard will need to take a breather at some point...
one point to remember in future: The cuts have been aggressive over the last
6 months, Dr Bollard has learned very swiftly from the 2006, let's play catch up with Rate Hikes, where he missed the boat somewhat. The point to remember is that once the tide turns (though we could see a prolonged period of low rates???) He could be hiking just as fast - this is probably a couple of years away now though.

John Key has been starting to point the finger at the media for focusing on too much negativity, go John. Would be good to hear some more anecdotes, obviously things are very different from this time last year, surely there's some good news out there??

Fiona Whyte