The Reserve Bank of New Zealand has cut its official cash rate by 25 basis points.
The policy goal of having lower interest rates is to support what is expected to be sagging economic activity and support full employment.
But for this to happen, the OCR cut needs to flow through to the real economy.
Wholesale interest rates dipped briefly on the RBNZ announcement, but this hasn't been sustained and they're back to where they were before the OCR cut.
Banks have started trimming the rates they pay savers, and investors in term deposits.
However, for the intended policy goal to be effective, banks need to reduce mortgage interest rates.
Here is our tracking of banks' floating mortgage rate charges, the main way the lower OCR will be reflected in our economy.
Floating rates are not so important for residential mortgage borrowers (most have a fixed rate contract), but they are important for rural lending and other SME loans.
If banks - especially the large banks - don't pass on most of the cut then the RBNZ policy effectiveness is undermined. There is no direct mechanism to require banks to respect RBNZ signals.
In fact, the major banks are in dispute with the RBNZ over the level of capital that they should hold. The central bank wants them to raise their capital resilience substantially. It is possible to speculate that these banks may collectively choose to pressure the RBNZ by not passing on most of the OCR cut until the regulator backs off its capital plans.