ASB
"The on-hold decision was widely expected, though a rate cut wouldn't have been a big surprise after the bold action last month. But, in line with our view, events since the August cut weren't large enough to prompt getting further on the front foot. The murky global environment and weak business confidence remain as growth risks. Against that, the RBNZ is heartened by the impact its monetary easing has had and expects household and business spending to pick up in response - and has put greater emphasis on fiscal policy.
Even though the OCR remained steady at this meeting, a lower OCR remains very much on the cards. We continue to expect a 25bp cut in November, which today's statement and meeting summary leave the door open for. But by itself the statement suggests that a November cut isn't a dead certainty, with a lingering possibility that an improved environment could see the RBNZ hold fire.
We still see a November OCR cut as the highly likely outcome, and have a list of several catalysts that could trigger follow-up action next year. Importantly, we expect growth will fall short of the RBNZ's August forecast, which should prompt the RBNZ to eventually break across the advantage line again".
Interesting to see more emphasis on fiscal policy picked up by ABS. Central banks around the world are recognising that they have reached their limits in supporting economies.
