Analysts at ANZ Bank New Zealand Limited (“ANZ”) explained that the recent data flow has been weak and the market has moved to price in around 50% chance of an OCR cut by mid next year.
Key Quotes:
“Our view is certainly that a cut is more likely than a hike, but is it time to definitively call cuts?”
“We are leaning that way, but are not over the line yet.”
“Our ANZ Business Outlook Survey has been very downbeat, but it is also possible that the survey could be overstating current weakness. We always look at a range of data to assess the state of the economy and so far the picture is looking softer, but very mixed.”
“We suspect that the RBNZ may well be willing to front-foot a response to a slowing before seeing it manifest in official GDP data, but it would nonetheless need to be convinced that the slowdown is real and relatively broad-based, and that extra monetary policy support is therefore warranted.”
“As such, there is a range of developments we – and the RBNZ – will be watching closely over the next couple of months.”
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