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 May.
- 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.
