The Shadow Board are divided over their recommendation to the Reserve Bank of New Zealand at Wednesday's meeting. In brief from the NZIER report:
- The Shadow Board is divided over whether the Reserve Bank should increase the Official Cash Rate (OCR) in the May Monetary Policy Statement. A larger number of Shadow Board members viewed an OCR increase of 25 basis points to 5.50 percent is warranted, given domestic inflation pressures remain high and the upside risk to inflation due to the weather events earlier this year.
- The rest of the Shadow Board members recommend the Reserve Bank should keep the OCR at 5.25 percent. One member highlighted that household inflation expectations are already heading in the right direction, and monetary policy takes time to have an impact. One was also concerned about the continued decline in profitability for businesses as consumers are increasingly more cautious about spending.
Previews posted:
- Poll shows most analysts expect a +25bp RBNZ rate hike on May 24
- Newsquawk Week Ahead: Highlights include FOMC mins, US PCE, RBNZ, Flash PMIs
- ANZ forecasts the RBNZ to raise the cash rate to 5.75% in July
- Westpac forecasts RBNZ will raise cash rate to 6%, keep it there until mid-2024
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The meeting is Wednesday, New Zealand time.
Statement due at midday NZ time:
- 0000 GMT
- 8pm US Eastern time time Tuesday
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The Reserve Bank of New Zealand 'shadow board' is put together by the NZIER (the New Zealand Institute of Economic Research)
- Its Monetary Policy Shadow Board is independent of the Reserve Bank of New Zealand
- the shadows do not represent what the RBNZ is going to do but rather what their view is that the RBNZ should do. That is, the Shadows do not preview what they think will happen, but what they think should happen.
- The Shadow Board aims to: encourage informed debate on each interest rate decision help inform how a Board structure might operate explore how Board members could use probabilities to express uncertainty
