ANZ analysts point out that the synchronised slowdown in global growth has become more pronounced, against a backdrop of below-target inflation in many economies.
Key Quotes
“Major central banks are to set to ease policy rates further, but many have little monetary policy ammunition to spare.”
“Back home, the direct impacts of slower global growth on the New Zealand economy have so far been muted. But confidence effects are likely weighing on business sentiment, employment and investment intentions.”
“Domestic growth looks set to trough at 2% in Q2, but the outlook from there is murky. Fiscal and monetary stimulus should provide a bit of a boost, which we expect will support a gradual acceleration in growth. But downside risks are heightened.”
“The inflation outlook is troubling – we’ve likely seen the peak in domestic inflation pressures, and more is needed from the RBNZ to help met their employment and inflation objectives. We think cuts in August and November, taking the OCR to 1%, should do the trick.”
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