KiwiBank with a forthright preview of the RBNZ meeting this week (Wednesday)
- Any talk of hikes now would be overkill. The data has clearly turned.
- Of course, there are still some hurdles to get through. We still need to see inflation back within the RBNZ’s 1-3% target band. A hard task that should be accomplished in the next few months. But the complete return to 2% is still a 2025 story. Aggressive tightening from the RBNZ has worked. And setting policy today is about influencing the economy over the next 18 months. So, the RBNZ’s sights should be set on the end of 2025, start of 2026. And with that in mind, rate cuts should be considered, not hikes.
- The weakness in the economy should quell domestic inflation pressures. And by our forecasts, we still see inflation falling back within the RBNZ’s 1-3% target band by the September quarter. That should open up the first rate cut in November.
- We will be on the lookout for a material softening in the RBNZ’s forecasts and rhetoric at the August MPS.
- So, what to expect from this week’s RBNZ meeting? Well first thing’s first, this Wednesday we’re getting an MP Review, not an MP Statement. So, we won’t get updates to the RBNZ’s forecasts or OCR track. We just get a policy decision and a one-page statement. The last MP Review in April was just 140 words. So, with that in mind, we’re not expecting a whole lot. The RBNZ should acknowledge the even deeper weakness in the economy. And they must refer to the collapse in business confidence last week.
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Earlier preview:
- Reserve Bank of New Zealand policy meeting this week - preview (on hold widely expected)
- Reserve Bank of New Zealand policy meeting - rates to be left on hold
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The Reserve Bank of New Zealand announce their decision at 2pm New Zealand time on Wednesday the 10th July
- which is is 0200 GMT on the 10th
- and 2200 US Eastern time on the 9th
