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🏦🇳🇿 Cable FX Macro Weekly Note: RBNZ Cash Rate Decision

**As seen in Risk In The Week report 09/29/23, subscribe at cablefxm.co.uk/reports

The RBNZ left its OCR unchanged in August, this was expected by all surveyed economists. While tightening paused, an OCR forecast from the central bank penciled rates at 5.58% by the first quarter of next year, this indicated a small chance that we will see another rate hike. Back in August, the central bank’s projections implied the economy contracting in Q3 and Q4, while inflation was seen at 6.0% by Q3. On prices, the RBNZ said there is still a risk that inflation does slow as much as expected, they pointed to measures of core CPI being too high. Over the press conference, RBNZ Governor Orr said that lifting the OCR track is not forward guidance, this dismissed speculation that the projections curve could provide a hint of the central bank’s next move. More recently, Q2 GDP figures came in higher than anticipated at 0.9% on the quarter, the news supported prospects of a soft landing for the economy. We remind you that the RBNZ has delivered 525bps of tightening since late 2021, we’re about the time when the rate hikes are starting to become evident. A survey compiled by Westpac showed 37% of N.Z. households reporting a worsening in their financial situation, only 10% reported seeing an improvement, they said this was the lowest “improvement” figure in 35 years. The desk at ANZ said that the Q2 GDP data showed a resilient economy and that this would keep a November rate hike “in play.” For October, analysts at ASB expect the RBNZ to keep rates unchanged at 5.5%, they do not see a change in rates until early 2025.


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