In 2008/09 we cut the Official Cash Rate (OCR) by nearly six percentage points, more than almost any other central bank cut. But like most other central banks we have been surprised at the way policy rates have needed to, and been able to, remain so low for so long.
We expected that most of the OCR cuts would be relatively short-lived, while the economy regained its footing. Financial market prices suggest that the private sector typically shared that sort of view. Two years ago, for example, we thought the OCR would be around 5.75 per cent by now (Figure 12).