If the definition of news is something rare and unusual, today is shaping up as one of the biggest days the finance pages have seen for years.

At 2pm the Reserve Bank may actually cut interest rates.

That hasn't happened since November 2016.

That represents 16 times that the nation's economists and business journalists have had to try and write headlines about the subtle wordplay of the Governor instead of real changes.


He said "may" instead of "could".

He's removed the word "likely"!

I'm not complaining about the job. My granddad was a plumber.

But it gets pretty esoteric and, at times, farcical.

In that sense the prospect of some real change comes as much-needed relief for those following monetary policy.

It might not happen this time of course, but the market now has the odds of a cut at better than even.

Today the Reserve Bank of Australia resisted market pressure to cut and left rates on hold at 1.5 per cent - a move that will takes little pressure of the RBNZ to move early.

ANZ economists say no - not yet. They see the first of two RBNZ cuts this year coming in August.

But others - KiwiBank chief economist Jarrod Kerr or ASB's Nick Tuffley for example - think that underlying weakness in last week's Labour data will be enough to tip the balance.

Unemployment fell but employment growth and wage inflation were both weak.

Even the chance of a change has been absent for most of the past 16 announcements.

Reserve Bank Governor Adrian Orr is famously not one to mince his words. Photo / Mark Mitchell
Reserve Bank Governor Adrian Orr is famously not one to mince his words. Photo / Mark Mitchell

The Reserve Bank clearly signalled a shift in thinking in its March monetary policy review.

"Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down."

It's a shame that the direction of change is negative.

The world isn't exactly going to hell in a handbasket but in New Zealand and globally, growth is slowing.

There is just not enough inflation to put upward pressure on the Reserve Bank - or almost any other central bank in the world.

Most economists, Reserve Bank Governor Adrian Orr included, would have preferred to see rates rising on the back of an improving global outlook of higher inflation.

The US Federal Reserve appears to have moved into a holding pattern.

The takeaway from its policy meeting last week was that it has fully retreated from further rate hikes but is at least ignoring President Trump - who wants them to slash rates by as much as a full percentage point to further fuel inject the US economy.

It's heartening that US Fed Chair Jerome Powell - a Trump appointee - is displaying the commonsense of a parent who won't let his child have jelly beans for dinner no matter how much they squeal.

As Trump himself likes to say, the US economy is in great shape, so quite why the Fed should be cutting rates - other than to artificially bolster Wall Street and middle class retirement funds - is hard to see.

President Donald Trump wants them to slash rates by as much as a full percentage point in the US. Photo / AP
President Donald Trump wants them to slash rates by as much as a full percentage point in the US. Photo / AP

Regardless, the Fed's retreat from a path back to historically normal interest rates has set the direction for other central banks, including ours.

Locally, the Reserve Bank can no longer ignore a softness in economic data that appears to flow from low business confidence, a slowing property market and, some would say, Government policy headwinds.

New Zealand's GDP growth is expected to bottom out mid-year at around 2 per cent before tracking back up towards 3 per cent.

That's hardly calamitous for a country that used to fall into recession every five to seven years.

The Government argues it is part of a transition towards fairer and more sustainable economic growth.

And there are some positives on the horizon that should see GDP growth lifting again soon.

An expected boost from the spending policies of the Coalition is taking longer than expected to flow through, but it is coming.

Export prices have been strong and commodity production good.

In March, New Zealand earned more from goods exports than it has in any other month - ever. The nominal value was $5.7 billion, up 19 per cent on the same month last year.

We've got dairy, meat and wood exports all in good shape at the same time, if not completely booming.

And the biggest of those perceived Government policy headwinds, the Capital Gains Tax proposal, has been swept definitively away.

On that basis, if the Reserve Bank is serious about the need for a rate cut, it might as well move sooner than later.

Given the already low level of retail mortgage rates and the tightness of banking lending policies right now, it would likely take two cuts to shift the dial significantly for mortgage holders.

We may as well get them in place by August to put downward pressure on the New Zealand dollar and add momentum to export earnings.

Orr is famously not one to mince words.

He's also not much of a ditherer. If he thinks something needs doing he does it.

But Orr no longer has complete control of the rate-setting process.

This week's call will be the first where the decision is made by a committee, which includes external non-bank members.

Whether the new system changes the way rates are set will be interesting but difficult to see - particularly after such a long period where change has not been needed.