While cutting rates for consumers means access to cheaper mortgage and business loan rates, the Reserve Bank's likelihood of cutting the OCR has not found full favour with some economists.
Prompting the bank cuts, and possibility of a Reserve Bank cut, is the fall in wholesale interest rates, with the 90-day rate declining from 3.21% at the end of January to 2.88% yesterday.
The two banks cut their one-year fixed-term home loans by 50 basis points to 5.95%, two-year fixed-rate loans by 16 basis points to 6.49% and the three-year rate by 11 points to 6.99%.
They were followed a few hours later by the ASB cutting some rates.
The Reserve Bank is due to announce its latest monetary policy statement on Thursday next week, with expectations it will cut the OCR from 3% to 2.75%.
Economic GDP data due out this month is expected to show New Zealand has gone into a double-dip recession - for a second time returning two consecutive quarters of negative growth in the economy.
BNZ senior economist Craig Ebert maintained yesterday ''some surprise'' at the ANZ and National Bank dropping rates so close to a Reserve Bank announcement, when historically banks would take a ''wait-and-see'' approach to a pending announcement.
Mr Ebert said while Christchurch's people must be aided in all ways possible, the Reserve Bank was in a ''difficult spot'' and he urged caution in the Reserve Bank using the OCR as a tool to deal with the problems created by the quake.
He said dropping the OCR could create distortions elsewhere in the economy, such as giving people in Auckland access to cheaper floating loans.
ASB senior economist Nick Tuffley is picking a 0.5%, or 50 basis points, cut in the OCR by the Reserve Bank next week, but cautions the OCR ''is not the best direct tool'' to assist quake-hit Cantabrians.
Both Mr Tuffley and Mr Ebert called on a mix of Government fiscal policy, such as the Government's income support for employees in Christchurch, and other funds, such as payouts from the commercial insurance markets, and direct bank assistance to better assist Christchurch.
Mr Tuffley said New Zealand's economy was ''flat'' before last Tuesday's quake and there was no growth in the last nine months of 2010.
The fourth-quarter GDP forecast was up just 0.1%, which was within the margin for error.
''Lower levels recently [of the OCR] haven't done much for the economy, which has been flatlining for a year anyway. A cut will give some measure of insurance [for all borrowers country-wide],'' he said.
However, Mr Ebert emphasised there was strength in the rural economy, both in sentiment, high commodity prices and profit expectations, which were at their highest since mid 2001.
''On balance, then, we remain cautiously optimistic that the economy as a whole is still well placed to overcome the trauma of the Christchurch earthquake and accordingly, is not in such dire straits that it requires help from the central bank by means of [OCR] rate cuts,'' Mr Ebert said.
