New Zealand's biggest retail bank is passing on the full 50 point cut to the Official Cash rate made by the Reserve Bank this morning.
The ANZ National Bank said it was cutting rates across the board, with a 50 point cut for business, farmer and household loans.
Its 'standard variable rate' will be reduced by 0.50 per cent to 6.45 per cent, from 6.95 per cent.
Business overdraft rates for ANZ and The National Bank are falling by 0.50 per cent, as is its variable lending rate for rural customers.
New Zealand's official interest rate has been cut to 3 per cent from 3.5 per cent, and Reserve Bank Governor Alan Bollard has warned that the timing and extent of global recovery remain "highly uncertain".
Today's cut of 50 basis points in the official cash rate (OCR) takes the overall reduction to 525 basis points in little more than six months as the global economy deteriorated rapidly.
But Bollard indicated that the days of big cuts to the OCR were now over.
"As economic activity troughs, we expect the rapid easing of monetary policy to slow," he said today.
"Any future cuts will be much smaller than observed recently. We do not expect to see in New Zealand the near-zero policy rates of some countries. New Zealand needs to retain competitiveness in the international capital markets.
"We will assess the need for further cuts in the OCR against emerging developments in the global and domestic economies and the responses to policy changes already in place," Bollard said.
ANZ National Bank chief executive Graham Hodges said the conditions in the wholesale money markets "remain challenging resulting in significantly increased funding costs for banks and we are no different."
"However we also appreciate that New Zealand households, farmers and business owners are facing similar challenges as a result of the current market downturn."
"As well as reducing lending rates we're committed to keeping capital flowing through the business and rural sector."
Westpac New Zealand said the 50 basis point drop in the OCR was what it had expected and that customers would benefit with a 0.4 per cent cut to Westpac's floating mortgage rate (to 6.49 per cent) becoming effective for its customers on March 19 - a change which was actually announced a month earlier.
At the same time Westpac reduced its six-month fixed rate to 5.79 per cent from 5.99 per cent.
Westpac said it was still reviewing other rates, but said significant cuts to fixed term mortgage rates were unlikely because the expectation of today's cuts had already been included in its calculations.
BNZ announced it was passing on the full rate cut for agribusiness overdrafts and business overdraft and variable rates.
"Matching today's OCR cut signals our continued support for our client base through what are clearly challenging times," said Craig Haycock, general manager of BNZ Partners in a statement.
Retail banks have been copping flak from some industry lobbyists, particularly Federated Farmers, for allegedly being slower to pass on rate cuts to farmers and other businesses, than to households with mortgages.
Haycock said the bank was also signalling that it had a strong appetite for quality "new-to-bank" business.
- HERALD ONLINE/NZPA
ANZ National cuts interest rates after Reserve Bank move
Dr Bollard speaking to the media on a Reserve Bank webcast today.
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