Economists expect the Reserve Bank to slash interest rates by as much as one percentage point later this week.
The Reserve Bank will be responding to the global financial crisis when it reviews the Official Cash Rate of 7.5% on Thursday.
Most economists expect Reserve Bank Governor Alan Bollard to cut rates by at least three-quarters of a percentage point.
BNZ head of research Stephen Toplis says a cut of up to 1.25 percentage points is possible.
However, he says the central bank needs to retain some of its ammunition.
ANZ expects the Reserve Bank to cut rates by one percentage point, followed by another cut of half a percentage point in December.
Chief economist Cameron Bagrie says such cuts are aggressive and exceptional and designed for extreme times.
As the global economy slows, the Reserve Bank's mandate may need to expand, he says.
Statistics New Zealand announced on Tuesday the Consumer Price Index rose 1.5% in the September quarter, taking the annual rate of inflation to 5.1% - the highest for 18 years.
New Zealand is technically in a recession. Gross Domestic Product was down 0.2% for the June quarter and 0.3% for the March quarter.
The last recession, in 1997-98, lasted nine months.
Previous moves
The Reserve Bank cut the OCR by half a percentage point to 7.5% on 8 September.
The rate was previously reduced from 8.25% to 8% on 24 July. That was the first cut since July 2003.
Central banks around the world slashed their interest rates in an unprecedented, co-ordinated move on 8 October.
The Reserve Bank of Australia cut its rate from 7% to 6% earlier in October.
