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Analysts at ANZ bank note that the Bank of England decision this week (Friday early morning NZT) looks to be a close call.

Key Quotes

“ANZ expects an easing on balance, given inflation is drifting away from target and with difficult trade negotiations ahead. Also this week, the Fed looks set to keep policy and its economic assessment unchanged at its meeting (Thursday morning NZT), with expectations that they are on hold for the foreseeable future.”

“ANZ expects no change from the Fed this year, with risks tilted towards more easing given stubbornly low inflation and inflation expectations, though the hurdle to easing is high. As always, markets remain sensitive to any changes in language from the Fed.”

“Closer to home, ANZ has changed its call on the outlook for the cash rate in Australia. Following strong employment data last week, imminent cuts no longer seem likely. Nonetheless, rate cuts are expected from the RBA in time, with employment growth expected to slow. ANZ sees two 25bp cuts this year; one in April, another before the end of Q3.”

“In New Zealand, the outlook appears to be more assured and the RBNZ can sit pretty, with last year’s rates cuts doing their job and domestic inflation about where it needs to be (as confirmed by solid CPI data last Friday). ANZ sees the OCR on hold for the foreseeable future.”