ANZ analysts note that the RBNZ’s OCR has already been cut 75bp this year to 1.00% and they expect a further cut to 0.75% in November, with the risks being skewed towards sooner and/or more.
Key Quotes
“There are signs that the OCR is already losing a degree of traction on bank lending and deposit rates – one of the key channels through which monetary policy affects the economy.”
“Diminishing pass-through to bank funding costs/deposit rates (and hence lending rates) adds to the risk that interest rates in New Zealand may already be approaching the effective lower bound in terms of their impact on mortgage and other borrowing interest rates, though not via other important channels such as the exchange rate.”
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