Snippets from UBS comments on the Reserve Bank of New Zealand rate cut and what is still to come

  • RBNZ ... board decided to move by a larger amount & quicker than suggested by the staff projections for the OCR over the next two years. This is the 2nd time the RBNZ board have pulled forward easing: the 25bps easing in May was earlier than the staff forecasts had recommended; and today's easing has pulled forward the 1% OCR from H1'20.
  • the board has demonstrated that it is more dovish (and more aggressive) than the staff
  • If the macro backdrop continues to weaken, the behaviour of the RBNZ board suggests that it will ease early and by more than the market expects.
  • NZD may remain on the back foot