The Reserve Bank has cut 1.5% off the official cash rate, bringing it down to 5%. The rate has now been cut 2.5% in just six weeks, an unprecendented slashing. Mortgage rates will drop as well, but perhaps not by as much because the banks (excluding Kiwibank) have to borrow most of their money from overseas for lending here and international credit is hard to come by.
The Reserve Bank should have been cutting rates much earlier as the economy started to slow due to the credit crunch and high oil prices. Instead, it pointlessly tried to fight the inflation coming from those oil price rises by strangling our economy with high interest rates. Now, at least we are finally getting cuts but they are so large that they amount to little short of panic from the Reserve Bank.