UPDATED 6.32PM The Reserve Bank is expecting to see lower mortgage rates, as a result of today's cut to the Official Cash Rate.
LISTEN ABOVE: Cameron Bagrie, ANZ chief economist, spoke to Rachel Smalley
The OCR is now at an all-time low of 2 percent, following this morning's 25 basis point cut.
Bank Governor Graeme Wheeler said it's up to banks to decide how to handle the cut in a competitive market, but he does have some expectations.
"We would like to see most of it passed on."
Wheeler has also made some pointed comments about the impact of immigration on the economy.
The Government is under pressure over the effect immigration has had on house prices and wages.
The Reserve Bank Governor said the issue is the quality of the people we're bringing in, their skills, and the value they add to the economy.
Mr Wheeler said bringing people with high skills who get good jobs is a good thing - but he also acknowledges the inflows have been high.
"Since the end of 2012, something like 160,000 people have come into the country, and that's about 4 per cent of the labour force."
ANZ Chief Economist Cameron Bagrie told Rachel Smalley the Reserve Bank is hoping to stimulate the economy by giving people more disposable income to spend - but banks also have to look after savers.
"In order for the money to be going out the door as a bank, you've got to get money coming the door. Of course if deposit rates keep going down, people will be less inclined to put their money in a bank. We're starting to see more competitor pressure to see those deposits coming into the bank."
ASB chief economist Nick Tuffley said inflation is still very low, and it's likely to be a long time before it climbs back up.
"So the Reserve Bank is eyeing up the need to do further cuts to try and hasten inflation back to a more comfortable level."
Meanwhile, Labour's looking for changes to monetary policy, after today's OCR cut.
Labour MP Grant Robertson said the Reserve Bank Governor has made it clear he thinks monetary policy has reached the limits of what it can do, in many countries.
And Mr Robertson isn't satisfied with the policy's focus on inflation.
"It's all very well for him to say, 'I only look after this small box and I can get that small box to be two percent' - that's not good enough. The policy targets agreement is not differentiating between tradeables and non-tradeables."
BANKS RESPOND
ANZ is the first bank to chop its floating mortgage rate, in response to this morning's OCR cut.
But home buyers will get only a fraction of the Reserve Bank's quarter of a percent move - ANZ is taking just 0.05 of a percent off the floating rate.
Commercial, agricultural and business borrowers could get bigger reduction, of 0.15 percent
On the flip side, the country's largest bank says it's planning to increase some term deposit rates by up to 0.3 percentage points.
ANZ chief David Hisco said the bank has five times as many customers with deposits than those with home loans - and wants to refocus its lending and borrowing emphasis.
Westpac has also cut by reducing its floating mortgage rate, shaving off 10 basis points.
It's also raising the rate for savers too, offering an extra half of one percent on six month term deposits.
Take your Radio, Podcasts and Music with you
