RBNZ likely to leave the OCR unchanged next week – ANZ

Sharon Zollner, chief economist at ANZ, suggests that they are expecting the RBNZ will likely leave the OCR unchanged at 1.75% at its Official Cash Rate Review next Wednesday at 2pm.  

Key Quotes

“The RBNZ will reaffirm the next move “could be up or down”. We’re content to be picking “down”.”

“Since the February  MPS, the main data has been that Q4 GDP surprised the RBNZ on the downside again, at 0.6% q/q versus RBNZ expectations of 0.8%. However, the details were decent so the ‘news’ element is pretty limited.”

“The local economy has slowed, and downside global growth risks are accumulating; the RBNZ will continue to acknowledge as much – as they did in February. However, there is a lot more data to flow under the bridge. Our call for an OCR cut in November is based on a steady accumulation of small disappointments, rather than a dramatic turn for the worse.”

“To the extent that the RBNZ cares more about capacity stretch than GDP growth  per se, the next QSBO supply-side read (2 April) and labour market data (1 May) will be particularly important for setting direction. In the meantime, the market is currently pricing around 50% odds of a 25bp cut by November, and 80% by March next year. We doubt the RBNZ will have much beef with that.”