UPDATED 10.46AM The dollar's fallen by about half a US cent after the Reserve Bank signalled that more cuts in the OCR are likely.

In an economic update this morning, the Bank says prospects for global growth have diminished despite very stimulatory monetary policy and low oil prices.

It warns significant downside risks remain.

Domestic growth is expected to remain supported by strong inward migration, construction activity, tourism, and accommodative monetary policy.

But the bank says low dairy prices are depressing incomes in the sector and it's likely further policy easing will be required

The New Zealand dollar fell by about half a US cent to US69.90c in the minute following the announcement.

Westpac market strategist Imre Spizer said it's a clear sign the bank plans to lower the Official Cash Rate from its already record low of 2.25 percent in a couple of weeks.

"The Kiwi US has fallen about two thirds of a cent so far, and I suspect there'll be more to go over the rest of the day. I think we should get something closer to about 69 cents, currently it's 69.60."

NZIER senior economist Christina Leung said the Reserve Bank highlights all the factors that markets have been pointing to, like the lower global outlook and weak dairy prices.

"It is likely that interest rates will be cut to two percent in the August meeting. Beyond that, the Reserve Bank is clearly concerned about the housing market pressures, and having lower interest rates below two percent will undoubtedly poor further fuel on the housing market fire."