Retail banks were quick to cut their mortgage lending rates, but concerns about the economy continued to emerge.
Mr Wheeler cut the OCR to 3%, meeting most market expectations. His comments made worrying reading.
Recent developments in China and Europe led to heightened uncertainty and increased financial market volatility, he said.
Particular uncertainty remained about the impact of the expected tightening in United States monetary policy.
New Zealand's economy was growing at an annual rate of about 2.5%, supported by low interest rates, construction activity and high net immigration.
Previously, the bank had said the economy was growing at ''around 3%'' annually.
The growth outlook was now softer than at any time of the June Monetary Policy Statement, he said.
''Rebuild activity in Canterbury appears to have peaked and the world price for New Zealand exports has fallen sharply.''
Mr Wheeler said headline inflation was below the central bank's 1% to 3% target range, due largely to previous strength in the New Zealand dollar and a large fall in world oil prices.
Annual inflation was expected to be close to the midpoint of the range early next year, due to recent exchange rate depreciation and as the fall in oil prices dropped out of the annual figure.
A key uncertainty was how quickly the exchange rate pass-through occurred, he said.
House prices in Auckland continued to increase rapidly but outside of Auckland, house price inflation generally remained low.
Increased building activity is under way in the Auckland region but it would take time for the imbalances in the housing market to be corrected.
The dollar had declined significantly since April and, along with lower interest rates, had let to an easing in monetary conditions.
While the currency depreciation would provide support to the export and import competing sectors, further depreciation was necessary given the weakness in export commodity prices.
''A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely,'' Mr Wheeler said.
Westpac chief economist Dominick Stephens said with underlying inflation continuing to prove soft, global dairy prices plunging, the Canterbury rebuild peaking early and business confidence falling, the Reserve Bank had its work cut out to return inflation to 2%.
There might be a short-term exchange rate-induced inflation spike next year.
''We are forecasting the OCR to fall to a record low of 2%.''
There was little in yesterday's statement to indicate the Reserve Bank had reached a similar conclusion, he said.
However, when the central bank conducted its full Monetary Policy Statement process in September, it could well signal OCR cuts more vigorously.
Westpac saw no reason to change its forecast of the terminal OCR.
The Reserve Bank's slightly more cautious mood did argue against the risk of a 0.5% OCR cut, something Westpac had been flagging, Mr Stephens said.
''Accordingly, we will shift to forecasting 0.25% cuts at each Reserve Bank meeting between now and next January.''
