Worldwide Rate Cuts

November 7, 2008 International FinanceNew Zealand Finance  No comments

As an indication of things to come in New Zealand, cash rates around the world are experiencing heavy cuts.

Leading the foray of moves into economic acceleration, the Bank of England has cut its interest rate by 150 basis points, lowering it to a level of 3% on the 6th of November. This follows a 50 point cut on the 8th of October.

Similar to the OCR cuts made by the Reserve Bank of New Zealand, the Bank of England expects that the current economic situation combined with the intended economic boost of the interest rate cuts will see inflation fall in the next quarter or the one following.

A similar sentiment is shared by the European Central Bank which also cut its rates by 50 basis points. This is the first time that the Bank of England rates are lower than that of the European Central Bank. The current cut is also the most severe that is available o n record.

The wave of cuts in Europe and Australia is a strong indication of further upcoming cuts to the New Zealand OCR.