ANZ expect the first Reserve Bank of New Zealand rate cut in February 2025 (prior May ’25)

Reserve Bank of New Zealand projection from ANZ in New Zealand.

In brief:

  • We have tweaked our Official Cash Rate (OCR) forecast and now
    expect the first OCR cut to come in February 2025, rather than
  • domestic
    inflation … we expect that meaningful progress is
    around the corner.
  • The real economy is very weak and given the vibe
    of “soft data” (surveys, leading indicators and the like), we are now
    more confident in the weak economic outlook
  • Before cutting the OCR, the RBNZ needs to not only be confident that
    CPI inflation is on its way to 2%, but that it can be reasonably
    expected to subsequently stay within the 1-3% target band.
  • by February next year, we are anticipating that the RBNZ
    will have seen Q4 CPI inflation at 2.6% y/y (non-tradable still 4.7%
    y/y, but we are forecasting it to drop sub-4% the following quarter),
    and unemployment through 5%. That should do it, in our view.

This article was written by Eamonn Sheridan at Source