BNZ forecast a November rate cut from the RBNZ (previously February)

The Reserve Bank of New Zealand performed a bit of a pivot in its brief statement yesterday.

ICYMI:

• RBNZ leaves it cash rate on hold at 5.5%, as expected

• NZD/USD drops after the RBNZ statement - hints of a closer rate cut

• New Zealand rate pricing implies 25bp rate cut for October vs. 16 before RBNZ statement

• Westpac on the RBNZ statement today - "less hawkish" than May statement

BNZ moved quickly to bring forward its expectation for the first rate cut from the RBNZ to November 2024:

• The statement, accompanying the expected ‘on hold’ decision, represented a significant moderation in the Bank’s hawkish stance from the May Policy Statement.
• Unlike May, a rate hike wasn’t discussed, and alongside weak activity it was noted that restrictive monetary policy has ‘significantly reduced consumer price inflation’.
• As a result of the shift in tone, we have reverted to forecasting the RBNZ will cut rates in November.

NZD/USD update, its been sold on bounces since the statement but has not extended much lower yet. Exuberance (yeah, deliberate choice of word, I'm just holding off adding 'irrational' as a prefix a little while longer) over expected Federal Reserve rate cuts ahead has supported it, and other 'risk' assets: