**As seen in Risk In The Week report 07/09/23, subscribe at cablefxm.co.uk/reports
The RBNZ has not decided on policy since late May when the board disappointed expectations of a 50bps rate hike as it delivered on half of that, the OCR was lifted to 5.50%. One key development was the RBNZ’s own projection for rate cuts starting in 3Q 2024 with a cash rate peak of 5.5%, this meant that the central bank is set to take further rate hikes off the table. The board’s projections now sees 2Q 2023 inflation at 6.1%, growth is expected to contract by 0.2% and 0.1% Q/q over the second and third quarters, they don’t see inflation falling within the 1-3% target band until 3Q 2024. More recently, New Zealand’s 1Q GDP growth data showed a contraction, this confirmed a recession, the consensus median sees the economy growing by 1.0% both in 2023 and 2024. The desk at Nomura pencils flat growth this year, UBS expects output rising by 0.3%, Goldman Sachs is calling for a 1.3% rise, BofA sees GDP rising by 0.9%. Analysts at UBS said that the most dovish surprise was the fact that the central bank kept the peak rate peak at 5.5%, they now expect the RBNZ to cut interest rates before the RBA. The desk at ANZ mentioned they will be focusing on the summary record of meeting for clues about the committee’s outlook on the skew of risks, they added that any shifts in their views will be closely watched. ANZ said that they expect the RBNZ will eventually have to do more, however, the July meeting won’t be the time and place.
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