BNZ preview the Reserve Bank of New Zealand meeting on November 27, saying that arguments for a 25, 50, or 75bp all have merits. Analysts at BNZ, though, say that a 50-point cut this meeting is their central view.
Citing:
- economic spare capacity continues to
grow and will do so for some time -
inflation will remain well contained around the 2.0% mark
and the unemployment rate will rise further over the next
few quarters. - Given the current level of the cash rate lies well above the
range of possible neutral rates we see strong justification
for a greater-than-25-point move. - Equally, though, we don’t think that what we are
experiencing is a shock that requires a knee-jerk response.
We’re not in a GFC or a pandemic but we are in a phase
something more akin to a “normal” economic cycle.
Consequently a 75 point move is neither needed nor
desirable. - Capping things off, the market is currently pricing in a 50
point cut and there is no need for the RBNZ to provide a
shock which could result in unnecessary instability in
interest rates, the currency and growth.
***
Earlier:
- Reserve Bank of New Zealand rate cut expected on Wednesday 27 November – preview
- Reserve Bank of New Zealand (RBNZ) Shadow Board recommend a 50bp cash rate cut this week
- ANZ forceast a 50bp interest cut from the RBNZ next week
- Reuters poll: RBNZ to cut cash rate to 4.25% on November 27
- Goldman Sachs expects a 50bp Reserve Bank of New Zealand rate cut this month
2pm New Zealand time on the 27th is:
- 0100 GMT on the 27th
- 2000 US Eastern time on the 26th
This article was written by Eamonn Sheridan at www.forexlive.com. Source