/www.fxserver.com/ Wholesale interest rates and the dollar are down in the wake of today's surprise move on interest rates.
The Reserve Bank has cut the official cash rate quarter of a percent to 5.5 percent.
Most economists were expecting the OCR to stay unchanged, citing the strong domestic economy.
However Reserve Bank Governor Allan Bollard cites the weak world economy, SARS and possible power shortages as reasons for the cut.
He says while the domestic economy remains strong, an expected drop in export income is expected to feed through into reduced demand.
That in turn will take some of the inflation pressure out of the economy.
The Reserve Bank says it is ready to adjust rates a little faster in response to unfolding evidence of a slowdown.
BNZ Chief Economist Tony Alexander says wholesale interest rates are down, and the dollar has lost about half a cent against the US dollar.
He thinks that will feed through to a reduction in floating mortgage rates.
Mr Alexander believes further interest rate cuts are possible later in the year as well.