- 23 out of 25 economists expect interest rates to be cut by 25 basis points next October
- Of the remaining two banks, one expects a 50 basis point rate cut and the other expects no change.
- 23 out of 25 economists expect the Reserve Bank of New Zealand to cut interest rates by at least 50 basis points to 4.75% by the end of the year.
- The remaining two expect to cut the cash rate to 5.00%, i.e. just one more rate cut.
To give some context, the previous consensus prior to this week’s rate cut was that the cash rate would be at 5.00% by year-end. So this is essentially taking into account Wednesday’s rate cut.
Only one of New Zealand’s major banks, ASB, correctly forecast a rate cut this week. But now all of them (ANZ, ASB, Kiwi Bank, BNZ and Westpac) are seeing 50bp rate cuts in Q4.
As a reminder, the Reserve Bank of New Zealand only has two more meetings left this year. The first is on October 9 and the second is on November 27. However, traders are currently pricing in around 78 basis points of rate cuts for the two meetings.