The key message this morning from Reserve Bank governor Graeme Wheeler will be in the last paragraph of his one-page summary of the official cash rate review.
Economists expect Mr Wheeler to hold the official cash rate at 2.5% today but they also expect him to cut two further times this year to take the rate down to 2%.
The last paragraph is reserved for the policy outlook.
Westpac economist Imre Speizer expected the Reserve Bank to shift from a conditional easing to an unconditional one.
Circumstances had changed since the last announcement.‘‘In our view, it is now clear further OCR reductions are warranted. We expect the Reserve bank will indicate a greater likelihood of OCR reductions.''
The expected statement from the central bank could be: ‘‘The OCR is expected to remain at or below the current level for some time'', he said.
That would indicate the bank's readiness to ease without committing it to any course of action.
That scenario should push the two-year swap rate only 0.02% lower and the New Zealand dollar down US0.25c.
A hawkish surprise for the markets would be the Reserve Bank keeping its policy outlook unchanged from December, Mr Speizer said.
A dovish surprise would be the delivery of an easing signal.
