RBNZ Preview: Another cut – Nomura

By FXStreet FXStreet (Bali) – Charles St-Arnaud, Economist at Nomura, expects the RBNZ to cut interest rates this week, adding that the Central Bank is likely to revise its growth outlook lower, although the Economist think the inflation outlook will likely be projected higher on weaker NZD.

Key Quotes

The Reserve Bank of New Zealand (RBNZ) holds its next policy meeting on 10 September. At the 23 July meeting, the RBNZ said that “a reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely,” leaving the door open to further policy easing.”

“We believe the RBNZ will ease monetary policy further at next week’s meeting, cutting its policy rate by 25bp to 2.75%, as widely expected by the market. However, what will be important is whether the RBNZ continues to indicate that further easing is coming.”

“As such we continue to believe the RBNZ is likely to cut again before the end of the year, bringing the policy rate to 2.50% by year-end. However, if milk prices continue to recover in coming months as they have been in recent weeks, the RBNZ may consider a pause.”
For more information, …read more

Source:: FX Street