Analysts at ANZ suggest that they have changed their OCR call and now expect the RBNZ’s next move to be a 25bp cut in November, with two follow-up moves taking the OCR to a record low of 1.0%.
“There are several reasons for our call. First, while we have not revised down our growth forecasts meaningfully, there are signs of waning momentum, in both the Q3 GDP result and forward-looking indicators. Upward revisions to GDP mean that the RBNZ is likely to conclude that a solid growth rate will be required to deliver inflation sustainably back at target.”
“Second, risks are accumulating around the global growth outlook, particularly China, and liquidity risks are pertinent to global financial markets. The impacts of the RBNZ’s proposed capital changes are uncertain, but unambiguously represent a tightening in financial conditions that will need to be offset with a lower OCR. And finally, the outlook for tradable inflation is also weaker, courtesy of lower oil prices.”
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