NZ central bank seen slashing rates

Wellington

NEW Zealand's central bank looks set to be forced into more aggressive interest rate cuts to support a flagging economy beset by crumbling dairy prices, sliding sentiment and low inflation.

At least one analyst is predicting that rates may drop by as much as 125 basis points (bps) to a record-low 2 per cent by year-end, highlighting the rapid downturn in fortunes for the agricultural-based economy which only last year was being touted as a "rock star" among developed nations.

"We were already expecting a 25 basis point cut next week and stick to that call, although a straight 50 bps cut is now a real possibility," said HSBC chief economist Pa…