Westpac chief economist Dominick Stephens said New Zealand markes were "stunned" by the cut.
New Zealand's central bank cut its benchmark interest rate to an all-time low of 1% on Wednesday as it forecast tougher economic conditions ahead.
'In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets'. "Clearly the external uncertainty from the trade war is driving considerations of easing by every central bank in the region".
Speaking in the House this afternoon, Robertson said it was worldwide factors, such as the economies of some of New Zealand's biggest trading partners weakening, that had forced the bank to cut.
The New Zealand dollar tumbled as much as 2.3 per cent to 63.78 USA cents, while the nation's two-year bond yield fell as much as 20 basis points to a record 0.767 per cent. Traders are now pricing in a 70 per cent chance the RBA will cut by 25 basis points at its September meeting.
ASB has been first out of the gate to respond to the announcement, cutting its variable home loan rate by 0.50% to 5.20% p.a., and its Orbit home loan rate by 0.45% to 5.30% p.a.
"We believe our new lower rates provide a fair and considered outcome for borrowers while also balancing the needs of our savings customers", says Craig Sims, ASB's executive general manager of retail.
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The S&P 500 dropped 2.9 percent which means it is headed for a six-day losing streak and potentially its worst day of the year. It additionally provides extra downward strain on inflation, which some economists fear could also be edging towards too weak.
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Some economists still expect the bank to cut yet again in November, which would take the rate to 0.75 per cent.
"We've got 66 (US) cents in the first half of next year, but if the RBA goes even earlier than we expected in rate cuts then it will be hard for the Aussie to avoid", he said.
Many had expected the cash rate across the Tasman to be lowered by 25 basis points but it was pushed to just 1.0 per cent citing weakened global activity as the trade war between the United States and China continues to rage.
"The Monetary Policy Committee agreed that a lower OCR is necessary to continue to meet its employment and inflation objectives", RBNZ said in a statement.
Inflation was expected to reach its 2 percent target and employment should remain strong, which are the RBNZ's overriding policy objectives.
The cut came just a day after Statistics New Zealand announced the country's unemployment rate had fallen to 11-year low of 3.9% while wages had risen by the most in a single quarter since 2008.
"Global economic activity continues to weaken, easing demand for New Zealand's goods and services".