Economists unanimous on rate cut

All of the economists surveyed by TMM Online gave a 60%-99% certainty that the central bank will slash rates to a new record low.

The strong view comes amid lacklustre growth, inflation and business confidence figures, and rate cuts taken by influential central banks including the US Federal Reserve and Reserve Bank of Australia. 

Economists believe the RBNZ will cut the OCR and leave the door open to further cuts this year, dependent on data over the next few months. 

"I expect the RBNZ to lower its forecast for the OCR to allow for another one or two OCR cuts within the year," said Peter Cavanaugh of Bancorp.

"Along with the OCR cut, we expect a lower OCR track, opening up the possibility of a further rate cut in the quarters ahead," ANZ's Michael Callaghan said.

All of the economists surveyed by TMM believe the OCR has not yet troughed in this cycle. 

Brad Olsen, of Infometrics, warned further rate cuts may be ineffective. 

"We expect that the Reserve Bank may well cut to 1% by the end of 2019, but strongly reiterate that if we were on the Monetary Policy Committee, we would vote not to cut. As we have repeatedly pointed out, further cuts to the OCR are having less effect," Olsen said.

Jarrod Kerr, chief economist at Kiwibank, said a cut next week was "a foregone conclusion".

"The question they’ll need to ask themselves is: how low are they prepared to go? And let’s face it, a cash rate below 1% is only a hiccup away. We’ve gone from worrying about the global economy and escalating trade tensions, to worrying a little more about our own economic activity," Kerr added.