RBNZ monetary policy meeting – Reuters poll is not clear cut, 19 say hold, 12 say 25bp cut

The Reserve Bank of New Zealand meeting on August 14 is very much ‘live’.

• decision due at 2pm New Zealand time
• which is 0200 GMT
• which is 2200 US Eastern time on the 13th

The Reserve Bank of New Zealand (RBNZ) is expected to keep its key cash rate at 5.50% at next Wednesday’s meeting. So says a majority, but not by many. As for market pricing, interest rate futures suggest an 85% chance of a rate cut next week and around 90 basis points of cuts by year-end

Some considerations for the RBNZ include:

• inflation has dropped to 3.3%, the lowest in three years but still above the Bank’s target range
• concerns over economic growth and rising unemployment

Comment from ANZ:

• expects no immediate cut
• believes the Bank will signal a quicker easing of rates due to the worsening economic outlook
• “We expect a cut in November, with the risk skewed towards an earlier move”

Other banks views:

• ASB and BNZ are predicting a cut next week
• Kiwibank, and Westpac expect it later in the year

Median forecasts indicate a rate drop to 5.00% by the end of the year

• RBNZ could lower rates by an additional 125 basis points in 2025, bringing the official cash rate to 3.75% by the end of 2025

Yesterday we had some news for the RBNZ, and for those looking for rate cut next week:

• New Zealand 2-year inflation expectations have dropped to 2.03% (prior2.3%)

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