'Shadow board' 53 per cent in favour of holding current interest rate but support is shifting towards a drop.

A panel of economists and business leaders has come close to calling for an interest rate cut when Reserve Bank Governor Graeme Wheeler reviews the official cash rate tomorrow.

The members of a "shadow board" set up by the New Zealand Institute of Economic Research are asked to give a percentage value for how much they prefer each interest rate the governor might go for.

The results are then aggregated to give a collective view which serves as an indicator of how convinced they are of the preferred option and how they see the distribution of risks around it.

The panel is 53 per cent in favour of leaving the OCR on hold at 2.5 per cent - down sharply from 62 per cent before the last review in September - and 45 per cent in favour of a lower rate.


All nine members have moved in a more dovish direction.

Kirdan Lees, the NZIER economist who set up the shadow board, said while it remained comfortable - just - with an OCR of 2.5 per cent, recent economic data suggested a cut might be warranted.

"Inflation is below the bottom of the [1 to 3 per cent target] band, the growth outlook for the second half of 2012 looks weak and unemployment remains stubbornly high," Lees said.

"The exchange rate continues to be overvalued."

Whereas six weeks ago Business New Zealand chief executive Phil O'Reilly favoured the status quo over a cut to 2.25 per cent by a ratio of 80:20, he now regards it as a 50:50 call.

Steel & Tube chief executive Luke Blunt has dialled back his support from 100 per cent last month to 80 per cent.

Bank of New Zealand head of research Stephen Toplis puts a 40 per cent weighting on the case for a cut.

He said last week that the Australian economy was looking shaky, resulting in grief for New Zealand manufacturers while the kiwi dollar was sitting 1.4 per cent above where the Reserve Bank assumed it would average over the December quarter.

On the other hand, dairy prices were rising again, the housing market continued to gain momentum and the rebuilding of Christchurch appeared to be starting in earnest, Toplis said.