The Reserve Bank of New Zealand cash rate monetary policy decision is due 7 August 2019 at 0200GMT.

  • Consensus expectations are for a cut to the cash rate of 25bps
  • The announcement will be accompanied by the latest RBNZ Monetary Policy Statement And then the media conference with Governor Orr following an hour later

The long story short on the impact of the excellent employment report released yesterday

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ICYMI:

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is not likely to change the RBNZ course, they do seem intent on another cut today. the only wariness I would flag are comments from board member Christian Hawkesby back in June who said rates could be seen on hold at current levels for the foreseeable future. Nevertheless I am in the 25bp cut camp for today.

A couple of bank comments on what to expect today, in brief.

BNZ:

  • the labour market data should provide the RBNZ with a stumbling block in the way of an overly aggressive easing stance
  • However … the labour market data are very much lagging indicators … there remain multiple leading indicators that are now hinting that a future deterioration in labour market conditions is plausible, indeed likely
  • board is currently meeting in the midst of extreme angst about the potential for the current China-USA trade spat to turn very ugly indeed
  • global risks are likely to dominate RBNZ thinking ensuring that an easing bias is maintained

ASB:

  • While the jump in employment growth may be a touch overstated, it's hard to argue with the fact the labour market finished Q2 in a genuinely tighter-than-expected position. The data don't change our view on RBNZ policy - we still expect a 25bps rate cut tomorrow and a further cut in November
  • environment of rapidly escalating global risks, the stronger starting point for the labour market means the RBNZ can afford to take a measured approach to policy easing
  • The broader economic slowdown now looks entrenched, and will likely translate into additional labour market slack ahead.

Earlier previews:

RBNZ Gov. Orr:

The Reserve Bank of New Zealand cash rate monetary policy decision is due 7 August 2019 at 0200GMT.