Search ForexCrunch

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.”