Thursday is shaping up as a pivotal day for the economy, with several releases due that should give a picture of how bad things could get in the next quarter.
The Reserve Bank will make its official cash rate decision at 9am, and Treasury will release the government accounts about an hour later.
In the United States, the Federal Reserve meets tomorrow (New Zealand time) and is expected to leave its central lending rate at zero while examining other unconventional ways of lifting the economy.
The Government's accounts are expected to be another sea of red ink, and any forecasts provided by Treasury are likely to be out of date.
At Treasury's briefing in December, Finance Minister Bill English indicated he thought that the worst case scenario had already been reached.
Indications are that New Zealand's economy has deteriorated further.
Westpac markets economist Michael Gordon said economic conditions had changed at an astonishing pace since the Reserve Bank's last monetary policy statement in December.
At that time, the Reserve Bank projected the 90-day bank bill rate would fall to 5.1%, and by delivering a "massive" 1.5% cut on the day it ensured the bills would reach that point quickly.
"But the continuing deterioration in the global economy suggests that the Reserve Bank has a lot more work to do from here."
The combination of weaker world growth, weaker near-term GDP outlook, weaker commodity prices and tight credit markets were worth up to 2% off the 90-day bank bills.
That implied a new low point of about 3%, in line with Westpac's OCR forecast of 2.5% by June, he said.
"A cash rate of 2.5% would be astoundingly low relative to New Zealand's history. But the severity of the global recession and the credit crisis means that the usual benchmarks for monetary policy are out the window.
"Many developed economies will face zero or near-zero policy rates by the end of this year. The US has already reached that point and is now looking to drive down longer-term market rates by buying bonds and asset-backed securities directly.
"In this environment, an OCR of 2.5% wouldn't look at all outlandish."
Cutting the OCR by 1% on Thursday would be the minimum, and the case for an even larger move was finely balanced, Mr Gordon said.
Westpac would argue that a 1.5% cut was necessary given the downgrades to world growth forecasts.
The International Monetary Fund (IMF) would cut its 2009 global growth forecast again, this time to between 1% and 1.5%, as economic conditions deteriorated further, an IMF official said.
The IMF's latest forecast, made in November, was for growth of 2.2%.
"It will be revised to 1 to 1.5% in 2009, which is huge," Axel Bertuch-Samuels, deputy director of IMF's monetary and capital markets department, told Reuters in the United Arab Emirates.
"Global economic prospects have deteriorated in recent months, consumer and business confidence have dropped to levels that we have not seen in decades, and activity, too, has dropped sharply."
The 2009 year would be enormously challenging for the world's economy, he said.
In the US, Fed Chairman Ben Bernanke and his colleagues are battling a three-headed economic monster: crises in the housing, credit and financial markets that - taken together - have not been seen since the 1930s.
While Mr Bernanke has pledged to do all he can to provide relief, President Barack Obama and Congress are racing ahead to enact an $US825 billion ($NZ1.56 trillion) package of increased government spending and tax cuts to revive the economy.
Against that backdrop, the Fed is all but certain to hold rates near zero and may offer greater insights into what other steps might be taken to ease the problems.
The Federal Open Market Committee - the central bank's main policy-making group - opens a two-day meeting tomorrow (New Zealand time) to assess economic and financial conditions, review the effectiveness of programmes already in place to deal with the trio of crises and examine new relief options going forward.
At its previous meeting in December, the Fed took the unprecedented action of slashing its key rate from 1% to a new, targeted range of between zero and 0.25%.
Economists predict the Fed will leave rates at that record-low range and probably through the rest of this year in a bid to help brace the economy.
