RBNZ likely to leave the OCR unchanged next week - ANZ

Sharon Zollner, chief economist at ANZ, suggests that they are expecting the RBNZ will likely leave the OCR unchanged at 1.75% at its Official Cash Rate Review next Wednesday at 2pm. 

Key Quotes

“The RBNZ will reaffirm the next move “could be up or down”. We’re content to be picking “down”.”

“Since the February MPS, the main data has been that Q4 GDP surprised the RBNZ on the downside again, at 0.6% q/q versus RBNZ expectations of 0.8%. However, the details were decent so the ‘news’ element is pretty limited.”

“The local economy has slowed, and downside global growth risks are accumulating; the RBNZ will continue to acknowledge as much – as they did in February. However, there is a lot more data to flow under the bridge. Our call for an OCR cut in November is based on a steady accumulation of small disappointments, rather than a dramatic turn for the worse.”

“To the extent that the RBNZ cares more about capacity stretch than GDP growth per se, the next QSBO supply-side read (2 April) and labour market data (1 May) will be particularly important for setting direction. In the meantime, the market is currently pricing around 50% odds of a 25bp cut by November, and 80% by March next year. We doubt the RBNZ will have much beef with that.”