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ANZ analysts point out that the RBNZ cut the OCR 25bp to 1.50% at the May MPS last week, citing slower global and domestic growth and the forecast OCR track implies only a 50% chance of a further cut (sometime next year).

Key Quotes

“The RBNZ downgraded their near-term outlook substantially, with GDP growth slowing to 2% y/y by Q2 2019 (in line with our forecast), implying the hurdle is high for a further cut on domestic factors in the near term. However, beyond Q2 the RBNZ is forecasting a strong cyclical lift in annual GDP growth that looks optimistic compared to our own forecast.”

“Accordingly, we continue to expect a further OCR cut in November, with one more cut to follow early next year. This week we’ll get another read on the housing market from REINZ and an update on migration.”