Reserve Financial institution of New Zealand preview – doubtless the ultimate 50bp rate of interest reduce

ANZ have printed their forecast for the RBNZ assembly on Wednesday 19 February 2025.

In short:

• We count on a 50bp reduce within the OCR to three.75% subsequent Wednesday. That might be
  in step with RBNZ November messaging, economists’ forecasts, and market
  pricing. Information for the reason that November Financial Coverage Overview has been combined, however
  total in step with the RBNZ’s steerage.
• With the OCR now a lot nearer to impartial and the economic system exhibiting clear indicators of
  life, we count on extra warning from the RBNZ from right here – that is doubtless the final 50bp
  reduce. Nonetheless, given the RBNZ’s central estimate of impartial is three%, the dangers are tilted
  in direction of a decrease OCR trough than the three.5% we’re forecasting.

Extra:

• tone to be considered one of confidence that the
  inflation outlook is benign
• whereas acknowledging upside dangers to tradable and thus
  headline inflation
• OCR observe will doubtless be decrease … we aren’t anticipating a really massive change within the
  observe total

On the foreign money:

• Assuming we don’t see an enormous change within the RBNZ’s observe, we don’t suppose we are going to see
  vital market strikes on the day, and volatility (in FX and rate of interest markets) will
  doubtless proceed to be pushed by offshore occasions.

This text was written by Aaron Cutchburt at www.ubaidahsan.com.



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