Reserve Bank of New Zealand (RBNZ) Shadow Board recommend a 50bp cash rate cut this week

The Reserve Bank of New Zealand meet this week, with a 50bp rate cut expected, although 75bp is getting fomw love too.

• ANZ forecast a 50bp interest cut from the RBNZ next week
• Reuters poll: RBNZ to cut cash rate to 4.25% on November 27

• Goldman Sachs expects a 50bp Reserve Bank of New Zealand rate cut this month

The background to this meeting are the cuts in August and October:

• August: The RBNZ reduced the Official Cash Rate (OCR) by 25 basis points, bringing it down to 5.25%. This marked the first rate cut since March 2020, signaling a shift from the previous tightening stance.

• October 2024: In response to a weakening economy and subdued inflation, the RBNZ implemented a more substantial cut of 50 basis points, lowering the OCR to 4.75%. This decision aimed to provide additional stimulus to the economy.

The New Zealand Institute of Economic Research (NZIER) runs a ‘shadow board’ of analysts. They are recommending a 50bp cut:

• Shadow Board recommends that the Reserve Bank of New Zealand (RBNZ) ease the Official Cash Rate (OCR) by 50 basis points to 4.25 percent in the upcoming November Monetary Policy Statement. With annual inflation now back to within the RBNZ’s 1 to 3 percent inflation target band while the New Zealand economy remains soft, most members agreed that a 50-basis point cut in November is appropriate. One member also pointed out that, given the 3-month gap between the November and February meetings, a 50-basis point cut in the upcoming meeting is appropriate so that the OCR can return to its neutral rate within the next 12 months.

More at that link.

2pm New Zealand time on the 27th is:

• 0100 GMT on the 27th
• 2000 US Eastern time on the 26th

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• The Shadow Board is independent of the RBNZ and does not represent what the RBNZ is going to do but rather what their view is that the RBNZ should do.
• That is, the Shadows do not preview what they think will happen, but what they think should happen.

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