Interest rates could drop further come November, ASB's top economist signals

ASB is not ruling out another OCR cut before the end of 2019 - but also says it is not guaranteed.

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Nick Tuffley from ASB makes the prediction after the official cash rate was cut on August 7. Source: 1 NEWS

The OCR rate was dropped by 0.5 basis points yesterday to a record low of 1 per cent - 0.25 basis points lower than most economists predicted.

The banks were quick to follow by lowering interest rates on their loan products.

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The new rate is 1.5 per cent and there could be more interest rate cuts on the way. Source: 1 NEWS

ASB Chief Economist Nick Tuffley today told 1 NEWS that his bank is not ruling out another drop before the end of 2019, despite yesterday's drop.

"I think it rules out the likelihood of another cut at the most immediate meeting which is in September - the Reserve Bank has really front-loaded things," Mr Tuffley said.

"We still think there's a good chance we see a cut in November - but timing is going to matter.

"We've got a very fluid global situation - like where things go between China and the US, who knows? It changes from day to day.

"We still have a domestic economy where it's really not lifting back up from that soft patch we saw earlier this year."

Mr Tuffley said that people considering now planning to take advantage of the low interest rate should be reassured that the rate hasn't been this low since the 1960s.

"Businesses will now have to think very hard about, well 'why would I not invest at these sorts of rates?' so that's the whole point of driving interest rates down," he said.

Businesses are feeling nervous, he said, due to both domestic and foreign factors, but "lower rates should help".