Prime Minister John Key has used his new status to give Reserve Bank governor Alan Bollard a clear message that he is expecting a "significant" cut in the official cash rate tomorrow.
Financial markets have now fully priced in a rate cut of 1.5% in the OCR, to take it down to 5%.
Another cut is forecast for early next year with an expectation the OCR will fall to 4% sometime next year.
New Zealand prime ministers in past years have been careful to keep away from directing the Reserve Bank on monetary policy - keeping a hands-off approach and wearing the results.
In the past, that has seen interest rates rise just before elections to meet inflation targets, something not usually helpful to incumbent governments.
Mr Key, who is keen to stamp his authority on the economic recovery, said he had not received any new economic data from Treasury secretary John Whitehead since he went to the Apec summit in Peru last week.
The next update would not be published until the second half of this month.
"I think it's fair to say that from comments he's made publicly he's downgrading his estimates on growth and upgrading his estimates on employment. It would be fair to assume that the growth number will be pretty close to zero for the next financial year."
The Government was working on an economic stimulus package designed to get New Zealand through the impact of the international financial crisis with minimum damage.
Mr Key said the Government was confident the framework laid out before the election was still appropriate, but it was still considering all its options."
"We'll be looking, like others, to see what the Reserve Bank governor does on Thursday but we would be anticipating significant rate cuts," he said.
In Australia, the Reserve Bank slashed 1% off its OCR, cutting it to 4.25%.
ABN Amro Craigs broker Chris Timms said the weight was now on Dr Bollard to cut 1.5% off the New Zealand OCR which would still leave it above the Australian rate.
Australian banks reacted immediately with most wiping 1% off their floating mortgage lending rates.
Reserve Bank of Australia governor Glenn Stevens said in his monetary policy statement that recent actions by governments and central banks to stabilise their respective financial systems had begun to take effect.
"Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries."
Commodity prices have fallen further.
Inflation was forecast to fall next year.
The Reserve Bank judged that a further significant reduction in the cash rate was warranted now to take monetary policy to an expansionary setting.
