ANZ in New Zealand rundown on the rbnz today:
- As universally expected, and as strongly signalled in November, the RBNZ cut the Official Cash Rate (OCR) by 50bp to 3.75% today.
- The tone of the accompanying forecasts and text was balanced, but also confident. The OCR track still bottoms out at 3.1% but falls more quickly than before. It’s not full steam ahead, though: it's consistent with moving lower in smaller 25bp steps from here. The published OCR track was not very different from market pricing going into the decision, but a small fall in interest rates and NZD was nonetheless seen as the market breathed a sigh of relief that the RBNZ had not taken a leaf out of the RBA’s hawkish book.
Forecast:
- Given the RBNZ’s central estimate of the neutral OCR is 3%, a reasonable baseline forecast is that they will cut the OCR that far, given their clearly expressed confidence in the medium-term inflation outlook. We’ve updated our own OCR forecast accordingly, adding 25bp cuts in May and July (in addition to April), taking the OCR to 3%. We’ll put out a brief ‘scenarios’ note tomorrow outlining risks on both sides around that forecast.
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The dates ahead:
