The prospect of an RBNZ rate cut in 2024 is rising

Via Westpac on their outlook for the Reserve Bank of New Zealand.

• RBNZ’s July OCR Review was markedly less hawkish than May.
• The RBNZ’s growth forecasts seem to have been significantly downgraded and crucially the RBNZ seems more confident that annual inflation will be below 3% quite soon.
• The recent QSBO survey likely crystalised the downside risks to the growth and inflation outlooks that were evident in other high frequency indicators.
• The RBNZ’s abrupt change in messaging at the July Review suggests a non-trivial risk of policy easing before long. Our central expectation remains that the RBNZ will begin easing policy in February next year. But an earlier move is very feasible and will be data dependent.

More informally (comment from the banks NZ Chief Economist):

• There’s a non-trivial risk of policy easing in 2024

Earlier from NZ, supporting the case for a rate cut, STAT:

• New Zealand services PMI for June 2024: 40.2 (prior 43.0)

NZD/USD update:

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