Further out, the 10-year swap rate fell by six basis points (bp) to 3.96%.
Market pricing had strongly favoured a 50 basis-point cut, as did most economists’ forecasts.
The Reserve Bank’s short statement on the rate cut gave little away, but monetary policy committee minutes accompanying the release looked to pave the way for another 50 basis-point cut at the bank’s next opportunity on November 27.
Harbour Asset Management portfolio manager Shane Solly said the sharemarket had responded positively.
“The market had a positive move pre-announcement, which accelerated post the announcement,” he said.
Salt Funds managing director Matt Goodson said share prices had gained in the aftermath.
“Volumes are light and there’s no real sense of there being a buying scramble at this stage,” he said.
“However, so much of our market volume occurs on the close that some of the reaction may be saved up to then.”
Goodson said next week’s CPI release would be closely watched for confirmation that inflation had been tamed.
“It is bizarre that this Reserve Bank meeting was held prior to that,” he said.
“The inflation outcome could see a real change to expectations which are leaning towards another 50bp in November.”
In the minutes, the committee acknowledged that the outlook was broadly consistent with its August monetary policy statement.
“Members agreed that an OCR of 4.75% is still restrictive and leaves monetary policy well-placed to deal with any near-term surprises,” it said.
“The committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.”
In its release, the bank said the committee assessed that annual consumer price inflation was within its 1 to 3% inflation target range and was converging on the 2%.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.