The consensus forecast was calling for the bank to cut by 50 basis points to 6.50% - instead, the bank cut by a full percentage point to 6.00%.

Stephen Walters, economist with JPMorgan said "it's quite a stunning move."

Although, he said, it's not surprising when one looks at the crisis in global financial markets.

Walters said clearly the bank is no longer concerned about inflation and "wants to make sure that commercial banks pass on a sizable rate cut."

Su-Lin Ong, economist with RBC Capital Markets agreed, saying "it caught the market off guard" but that the move was driven by the "deterioration in global credit markets over the last month."

She said the bank is intending to reduce key lending rates. "They're trying to get mortgage rates down, business lending rates down," she said.

Ong said the bank obviously thought that whatever rate cut they chose, "banks were unlikely to pass on all of today's official move."

Peter Pontikis, strategist with Suncorp said the decision "is all explainable in hindsight."

"Events have moved very quickly. The reality is they saw exactly what we saw¥with the elevated external credit costs they've gone the way to canceling the impact on the domestic economy, they've gone the way to blunt the external credit shock," he said.

Pontikis said the bank's statement conveyed the decision doesn't necessarily imply further rates cuts, and the bank wishes to stress the point that "we are not in a recession."

Walters disagreed, and said he believes there are more rate cuts to come this year.

Ong said, "There is nothing in today's statement to say they won't move again, rates are going lower, possibly before year end but definitely in 2009."

Ong said in 2009, rates could head as low as 5.25%, or lower.

The bank's lack of transparency in this particular move received no criticism from economists.

Ong summarized that the bank is usually quite transparent, and that these are "pretty extraordinary times."

"There are probably people in the markets today that are saying they didn't convey their message very well¥I think it would be pretty harsh to be throwing that kind of criticism at the bank," she said.

By Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it

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