ANZ forecast 3 25bp rate cuts from the Reserve Bank of New Zealand, in April May and July

ANZ in New Zealand rundown on the rbnz today:

• As universally expected, and as strongly signalled in November, the RBNZ cut the
  Official Cash Rate (OCR) by 50bp to 3.75% today.
• The tone of the accompanying forecasts and text was balanced, but also confident.
  The OCR track still bottoms out at 3.1% but falls more quickly than before. It’s not full
  steam ahead, though: it’s consistent with moving lower in smaller 25bp steps from
  here. The published OCR track was not very different from market pricing going into
  the decision, but a small fall in interest rates and NZD was nonetheless seen as the
  market breathed a sigh of relief that the RBNZ had not taken a leaf out of the RBA’s
  hawkish book.

Forecast:

• Given the RBNZ’s central estimate of the neutral OCR is 3%, a reasonable baseline
  forecast is that they will cut the OCR that far, given their clearly expressed
  confidence in the medium-term inflation outlook. We’ve updated our own OCR
  forecast accordingly, adding 25bp cuts in May and July (in addition to April), taking
  the OCR to 3%. We’ll put out a brief ‘scenarios’ note tomorrow outlining risks on both
  sides around that forecast.

***

The dates ahead:

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