A Reserve Bank decision to cut the official cash rate from 1 per cent to 0.25 per cent will not make any difference to economic outcomes whatsoever, BNZ head of research Stephen Toplis says.

He said the Government's decision on Saturday to require all new arrivals to self-isolate for two weeks had cemented a "deep recession" in New Zealand. The impact on tourism and airports would take 6 per cent off gross domestic product, he said. That would be offset by no New Zealanders taking foreign holidays, which would mean a net fall of 2 per cent in GDP from the two sectors.

On top of that, there would be an impact on sports, entertainment, broadcasters, film sector and investment markets.

The BNZ had already flagged that the coronavirus outbreak was likely to push the New Zealand economy into recession.

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"The rescue mission is under way but even with this help, be prepared for a significant economic downturn," Toplis said. "It's time to batten down the hatches. This is going to be a very rough ride."

The three quarters to the end of September could deliver New Zealand one of the sharpest drops in activity in living memory, he said.

GETTY IMAGES The sporting sector will be affected, along with tourism and hospitality, BNZ says/

"We don't think lowering interest rates will make any difference to economic outcomes whatsoever, in the current environment. In their heart of hearts, we don't think the Reserve Bank thinks so either. But, under the pressure of global financial markets, and the very real need to be seen to be doing something, the bank felt it simply had to move and move big."

Toplis said the bank's decision to delay the introduction of new capital requirements for banks could have a bigger impact.

"With a recession underway, there is likely to be a significant demand for working capital from the business sector. These requirements were running headlong into the banking sector's need to meet the Reserve Bank's new capital requirements.

"All that said, this is not a green light for the banks to bail out the entire business sector. Good performing businesses, which have a track record that suggests bridging finance will get them through to the inevitable upturn, have little to fear but others which are already in difficulty and/or are exposed to sectors that will be seriously beaten up will still face a difficult battle. Indeed, business failures are inevitable."