Reserve Bank of New Zealand forecasts from ANZ in New Zealand.
Briefly:
- We have revised our forecast for the official cash rate (OCR) and now expect the first OCR cut to come in February 2025, rather than May.
- Domestic inflation… We expect that there will be tangible progress around the corner.
- The real economy is very weak and given the atmosphere of “weak data” (surveys, leading indicators and the like), we are now more confident in the weak economic outlook
- Before cutting the OCR rate, the RBNZ not only needs to be confident that CPI inflation is on track to 2%, but is reasonably expected to subsequently remain within the 1-3% target range.
- By February next year, we expect the RBNZ to see Q4 CPI inflation at 2.6% y/y (still not negotiable at 4.7% y/y, but we expect it to fall below 4% in the quarter the next). Unemployment is 5%. This should do it, in our opinion.
This article was written by Eamonn Sheridan at www.forexlive.com.
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