Most economists expect the Reserve Bank to slash interest rates to as low as 5.5% this week, following bold cuts around the world as central banks attempt to minimise the looming global recession.
The New Zealand economy has been in recession since the start of this year, and is expected to keep shrinking until at least the middle of next year.
Business confidence has fallen to its lowest level in 20 years, building consents have hit a record low, and unemployment is expected to rise.
On 23 October the Reserve Bank cut the Official Cash Rate by a full percentage point, to 6.5%.
Reserve Bank governor Allan Bollard said the cut was needed because international market turmoil meant the outlook for New Zealand had worsened since the last review in September.
On 8 September, it cut the OCR by half a percentage point to 7.5%.
The RBNZ previously reduced the rate from 8.25% to 8% on 24 July, which had been the first cut since July 2003.
Economists say the economy is in uncharted territory, and with inflation a distant memory, the cost of borrowing needs to fall sharply on Thursday.
A senior strategist at TD Securities in Australia, Joshua Williamson, predicts the Reserve Bank will cut interest rates by 150 basis points.
He says New Zealand is likely to have a more protracted recession than initially thought.
Mr Williamson says housing investment will remain subdued, consumers will be spending much less and there is less room for the Government to use fiscal policy to stimulate the economy.
But Infometrics economist Christopher Worthington says the situation in New Zealand is not as drastic as overseas, and predicts a 75 basis point cut.
He says domestic data has not deteriorated as much in New Zealand as the Reserve Bank thought.
Head of research at BNZ, Stephen Toplis, says the market is expecting a three-figure cut, and anything below that could be risky.
He predicts the Reserve Bank will lower interest rates by at least 100 basis points, and as much as 150.
Mr Toplis says current market pricing is already assuming the bank will cut at least 125 basis points.
He says if the bank was to disappoint on that currency would rise sharply and interest rates, including mortgage rates, would go back up.
In the longer term, he expects interest rates to drop to 4% by the middle of next year.
Josua Williamson at TD Securuties predicts deeper cuts, with interest rates falling to 2.75% by the middle of next year.
He says this will be required to restimulate the economy in the absence of any meaningful fiscal policy stimulus from the newly elected Government.
Mr Williamson says the Reserve Bank's focus will be on rescuing the economy when it cuts interest rates this week.