BNZ forecast a November rate cut from the RBNZ (previously February)

The Reserve Bank of New Zealand performed a bit of a pivot in its brief statement yesterday.

ICYMI:

• RBNZ leaves it cash rate on hold at 5.5%, as expected

• NZD/USD drops after the RBNZ statement – hints of a closer rate cut

• New Zealand rate pricing implies 25bp rate cut for October vs. 16 before RBNZ statement

• Westpac on the RBNZ statement today – “less hawkish” than May statement

BNZ moved quickly to bring forward its expectation for the first rate cut from the RBNZ to November 2024:

• The statement,
  accompanying the expected ‘on hold’ decision,
  represented a significant moderation in the Bank’s hawkish
  stance from the May Policy Statement.
• Unlike May, a rate
  hike wasn’t discussed, and alongside weak activity it was
  noted that restrictive monetary policy has ‘significantly
  reduced consumer price inflation’.
• As a result of the shift in
  tone, we have reverted to forecasting the RBNZ will cut
  rates in November.

NZD/USD update, its been sold on bounces since the statement but has not extended much lower yet. Exuberance (yeah, deliberate choice of word, I’m just holding off adding ‘irrational’ as a prefix a little while longer) over expected Federal Reserve rate cuts ahead has supported it, and other ‘risk’ assets:

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