This reflects the fact that, as in Japan (Chart 10), the level of labor productivity per employed worker tends to be lower in the nonmanufacturing  BIS central bankers’ speeches  5  than in the manufacturing sector. This is mainly due to the nonmanufacturing sector being more labor-intensive and more regulated while having limited opportunity for exercising economies of scale.
The OCR was cut during 2008 and early 2009 from a high of 8.25 percent to just 2.5 percent. These reductions were appropriate, despite high headline rates of inflation at the time due to record high oil prices. The policy easing was consistent with an outlook for rapidly diminishing inflation pressures as the global and domestic economies turned sharply downwards.