THE Reserve Bank cannot set interest rates solely for NSW. But if it could, rates would be about 2 percentage points lower than they already are, economists say.

An assistant Reserve governor, Malcolm Edey, noted on Wednesday that according to a number of indicators, including its slowing retail sector, NSW was looking a "fair bit" weaker than the rest of the country. The Herald has calculated if the banks lowered interest rates by 2 percentage points - NSW borrowers with a $300,000 mortgage would be about $380 a month better off.

The chief economist at nabCapital, Robert Henderson, said that if policymakers were setting rates solely for the NSW, "you would want very stimulatory settings".