Bank bill market bets on Brash move

By ELLEN READ

Yields on 90-day bank bills have fallen to two-year lows as the market continues to price in a further easing from Reserve Bank Governor Don Brash next month.

The bill yields dipped below 5 per cent yesterday to levels not seen since September 1999. They closed at 4.96 per cent.

The market has fully priced in a 25 basis point official cash rate cut at the bank's next review on November 14 and momentum is building for a 50 basis point reduction. The official cash rate is now 5.25 per cent.

Interest rates have fallen sharply around the world since the September 11 terrorist attacks.

Ninety-day bills tend to move in tandem with the bank's official cash rate.