Reserve Bank of New Zealand preview – likely the final 50bp interest rate cut

ANZ have published their forecast for the RBNZ meeting on Wednesday 19 February 2025.

In brief:

• We expect a 50bp cut in the OCR to 3.75% next Wednesday. That would be
  consistent with RBNZ November messaging, economists’ forecasts, and market
  pricing. Data since the November Monetary Policy Review has been mixed, but
  overall consistent with the RBNZ’s guidance.
• With the OCR now much closer to neutral and the economy showing clear signs of
  life, we expect more caution from the RBNZ from here – this is likely the last 50bp
  cut. However, given the RBNZ’s central estimate of neutral is 3%, the risks are tilted
  towards a lower OCR trough than the 3.5% we are forecasting.

More:

• tone to be one of confidence that the
  inflation outlook is benign
• while acknowledging upside risks to tradable and thus
  headline inflation
• OCR track will likely be lower … we aren’t expecting a very large change in the
  track overall

On the currency:

• Assuming we don’t see a big change in the RBNZ’s track, we don’t think we will see
  significant market moves on the day, and volatility (in FX and interest rate markets) will
  likely continue to be driven by offshore events.

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