ANZ expect the first Reserve Bank of New Zealand rate cut in February 2025 (prior May ’25)

June 06, 2024 at 10:52PM
Reserve Bank of New Zealand projection from ANZ in New Zealand.

In brief:

We have tweaked our Official Cash Rate (OCR) forecast and now
expect the first OCR cut to come in February 2025, rather than
May.

domestic
inflation … we expect that meaningful progress is
around the corner.

The real economy is very weak and given the vibe
of “soft data” (surveys, leading indicators and the like), we are now
more confident in the weak economic outlook

Before cutting the OCR, the RBNZ needs to not only be confident that
CPI inflation is on its way to 2%, but that it can be reasonably
expected to subsequently stay within the 1-3% target band.

by February next year, we are anticipating that the RBNZ
will have seen Q4 CPI inflation at 2.6% y/y (non-tradable still 4.7%
y/y, but we are forecasting it to drop sub-4% the following quarter),
and unemployment through 5%. That should do it, in our view.

This article was written by Eamonn Sheridan at www.forexlive.com.

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