11 Jun 2015
RBNZ might cut rates again in July – ANZ
FXStreet (Barcelona) - According to Economists at ANZ, the slowing New Zealand economy and the data risk ahead remains supportive of another rate cut in July.
Key Quotes
“The RBNZ’s 90-day projections imply another cut before the end of the year. Normally we’d expect the RBNZ to follow up one cut with another. But interestingly, communication from the RBNZ suggests further moves will be stop-start in nature (and data-contingent of course, so every meeting is “live”). That seems a little too cute to us, but it does make a follow-up move in July a 50-50 proposition.”
“A July cut remains our central forecast given the risk profile we see around the upcoming economic data flow. The economy is slowing more rapidly than is openly acknowledged, in our view.”
“There is a 50% probability we’ll see a third cut before year end.”
“We see downside risks to the RBNZ’s growth projections and in particular the forecasts over the June to December quarters this year (0.8% per quarter). That’s an above-trend rate and we don’t think the economy’s engine is running that smoothly.”
“The NZD remains the obvious release valve to offset a deteriorating mix of growth and lower terms of trade. The RBNZ is projecting the TWI to keep easing to sub-72 and we concur with that.”
Key Quotes
“The RBNZ’s 90-day projections imply another cut before the end of the year. Normally we’d expect the RBNZ to follow up one cut with another. But interestingly, communication from the RBNZ suggests further moves will be stop-start in nature (and data-contingent of course, so every meeting is “live”). That seems a little too cute to us, but it does make a follow-up move in July a 50-50 proposition.”
“A July cut remains our central forecast given the risk profile we see around the upcoming economic data flow. The economy is slowing more rapidly than is openly acknowledged, in our view.”
“There is a 50% probability we’ll see a third cut before year end.”
“We see downside risks to the RBNZ’s growth projections and in particular the forecasts over the June to December quarters this year (0.8% per quarter). That’s an above-trend rate and we don’t think the economy’s engine is running that smoothly.”
“The NZD remains the obvious release valve to offset a deteriorating mix of growth and lower terms of trade. The RBNZ is projecting the TWI to keep easing to sub-72 and we concur with that.”