The BNZ Research Team lowered the profile for the Reserve Bank of New Zealand interest rates. They think the RBNZ will defer due to: global growth outlook deterioration, a little less aggressive Federal Reserve, soft NZ Q3 retail sales, and lower commodity prices.
Key Quotes:
“Our central scenario now sees the first rate increase delayed until November 2019 from August 2019 with the cash rate peaking and stalled at 2.25% (previously 2.75%).”
“Clearly the interest rate track is heavily data dependent and if inflationary pressures do come quicker and stronger than anticipated our original interest rate track will come back into focus. Alternatively, given the current stance of the RBNZ it is conceivable that interest rates remain unchanged for a very long time. We now think the risk of a flatline track is greater than the upside alternative.”
“And lastly, if no inflation is generated during the current period and the NZ economy gets sideswiped by falling global activity there remains an outside chance that the next move in rates is down, albeit some distance into the future.”
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