Dominick Stephens, chief economist at Westpac, points out that the Reserve Bank of New Zealand has reduced the OCR to 1.50% at today’s Monetary Policy Statement.
Key Quotes
“The press release consisted of a justification for cutting the OCR – low inflation, slowing domestic economy, and global risks. There was nothing at all in the press release to indicate what the RBNZ is thinking about future OCR moves.”
“The RBNZ forecasts the OCR to drop to 1.4% by March 2020 – this is roughly equivalent to half a further cut. This allows for the possibility of further OCR cuts, but does not commit the RBNZ.”
“Our interpretation is that the RBNZ is genuinely open minded about whether to cut the OCR again or not.”
“We judge the probability of a follow-up OCR cut in June as low. August is more of a live possibility, but our current forecast is that the RBNZ will keep the OCR on hold at 1.5% until mid-2020, when it will reduce the OCR again.”
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