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Reserve Bank To Cut OCR By 100 Points, Say Traders

Contributor:
Fuseworks Media
Fuseworks Media
Reserve Bank To Cut OCR By 100 Points, Say Traders

Traders on iPredict, New Zealand's real money prediction market, are picking the Reserve Bank to cut the OCR by 100 basis points on 23 October. There is a 43 percent chance the Official Cash Rate will be cut by 100 points later this month, according to iPredict traders.

"The high likelihood that traders are giving to an unprecedented 100 point cut in the OCR indicates how serious they think the global financial situation is for New Zealand," said iPredict CEO Matt Burgess.

A 100 point reduction would be double the largest movement of the OCR, either up or down, in its history. iPredict's OCR contracts launched early on Friday, with traders quickly favouring a 100 point cut. Traders are also giving a 27 percent chance the OCR will be cut by 75 points, and a 21 percent chance of a 50 basis point cut.

"It's a real-time barometer of events as they happen. As the global financial crisis continues to unfold in the next two weeks, we can measure how serious this is for New Zealand via movements in OCR expectations. An increase in the chance of a 100 point cut will tell us things are getting worse not better," said Mr. Burgess.

iPredict is owned by Victoria University and the Institute for the Study of Competition and Regulation. It is authorised by the Securities Commission as a futures dealer. The primary purpose of iPredict is research and education. Anybody can browse iPredict and see the predictions for free by going to www.iPredict.co.nz. Traders must be 18 years and older to set up an account. Accounts are free to set up and people can start trading with as little as $5.

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