Economic weather report: Wholesale deflation and services contraction point to another OCR cut

Bernard Hickey delivers the latest Economic Weather Report in association with ASB, including news that wholesale prices for both inputs and outputs fell in the March quarter, which was more than economists expected. The services sector, which includes tourism, contracted for its 11th month in a row in April and the Performance of Services Index showed another deterioration. Both of these figures indicate the Reserve Bank will have room to cut the Official Cash Rate by a further 25 basis points to 2.25% on June 11. But it's unlikely to be passed on by banks to savers and borrowers because their overseas funding costs are high and savers here will not tolerate more rate cuts.