BNZ summarise their reasoing:
- QSBO just awful
- CPI headed sub 2.0%
- Soft labour market to subdue non-tradables
- Rate settings need to move quickly towards neutral
- 50 basis point cut at October meeting warranted
"In our opinion, we think the disinflationary information that we have received will dominate and that this will, ultimately, encourage the RBNZ to accelerate the easing process."
BNZ also outline the arguments against a 50bp rate cut:
- the strength in the ANZ survey
- the fact that Q2 GDP surprised to the upside with activity levels now 0.2% higher than anticipated and private consumption 1.3% above expectations
- ongoing elevation in non-tradables inflation
- an increase in confidence in the housing market
- concern that an acceleration might be criticised by some as another RBNZ change in view
- concern that current market pricing for future rate cuts is overdone
NZD/USD has dribbled lower on the session, currently around 0.6330.
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RBNZ meet October 9:
