BNZ sums up its reasons:
- QSBO is just awful
- Consumer Price Index heads below 2.0%
- Soft labor market to subjugate non-tradable goods
- Price settings should move quickly towards neutrality
- A 50 basis point cut is warranted at the October meeting
“In our view, we believe that the reflationary information we have received will dominate and that this will ultimately encourage the RBNZ to accelerate easing.”
BNZ also outlines the arguments against a 50 basis point rate cut:
- Strength in ANZ Survey
- The fact that Q2 GDP surprised to the upside with activity levels now 0.2% higher than expected and private consumption 1.3% above expectations
- The continuing rise in inflation of non-tradable goods
- Increased confidence in the housing market
- Concern that the acceleration may be criticized by some as another change in the RBNZ’s view
- Concern that the current market pricing of future interest rate cuts is overstated
The NZD/USD pair fell during the session, and is currently sitting near 0.6330.
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RBNZ meet October 9:
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