Bollard cuts interest rates - but what will the banks do now?
Page 1 of 2 .... Updated 2:45PM Thursday July 24, 2008

The Official Cash Rate was this morning cut for the first time in five years but homeowners might have to wait for their mortgage rate to follow suit.

Reserve Bank governor Alan Bollard this morning cut the OCR by 25 basis points, taking it down to 8 per cent, the first of an anticipated series of interest rate cuts.

But, since most banks fund much of their lending on international markets - which have tightened drastically as a result of the global credit crisis - the OCR may have little immediate effect on mortgage holders.

Kiwibank, which has led other markets down with interest rate cuts this year, said today it would not immediately cut rates further as a result of the Reserve Bank's move.

Spokesman Bruce Thompson said the state-owned bank had essentially anticipated the Reserve Bank's move today with its earlier cuts.

More here.