New Zealand – RBNZ shadow board split on Reserve Bank interest rate cut

The New Zealand Institute of Economic Research (NZIER) runs a ‘shadow board’ of analysts. 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.

From their report, in brief:

• The NZIER Shadow Board is divided over whether the Reserve Bank of New Zealand (RBNZ) should decrease the Official Cash Rate (OCR) in the upcoming August Monetary Policy Statement.
• Over half of the Shadow Board members viewed that a 25 basis-point decrease in the OCR is needed now, given the continued slowing in the New Zealand economy and the labour market, and annual CPI inflation is nearing the 1 to 3 percent inflation target band.
• The rest of the members recommended the Reserve Bank keep the OCR at 5.50 percent.
• One member considered that there is still not enough evidence from the economic data indicators to justify a cut in the OCR now.

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Earlier preview:

• RBNZ monetary policy meeting – Reuters poll is not clear cut, 19 say hold, 12 say 25bp cut
• ANZ forecast the RBNZ to remain on hold next week, signal a rate cut later in the year
• NZD traders – Westpac forecasts the RBNZ to cut by 25bps in October and November 2024

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The Reserve Bank of New Zealand announce their decision at 2pm New Zealand time on Wednesday 14 August

• which is 0200 GMT
• and 2200 US Eastern time on Tuesday

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