RBNZ will leave the OCR at 1.5% - Westpac

Sharon Zollner, chief economist at Westpac, expects that the RBNZ will leave the OCR unchanged at 1.5% at its Official Cash Rate Review next Wednesday at 2pm. 

Key Quotes

“The RBNZ will reaffirm they remain data dependent and open minded about whether another OCR cut will be required. However, we suspect that given the dovish capitulation of central banks globally in the face of marked risks both economic and political, the Committee might just be verging on pleasantly surprised if it weren’t, in time.”

“For now, though, things have been evolving on balance much in line with the Reserve Bank’s (sharply lowered) expectations.”

“All up it is hard to argue that the economy is in need of another OCR cut urgently. But global growth risks are accumulating, and their shadow appears to be influencing employment and investment decisions here. And central bank peers in Australia, Europe and the US have made a coordinated dovish turn.”

“The Committee will be aware that if they don’t do the same to some extent, the NZD could lift. We therefore expect some tweaks to head off this possibility, perhaps acknowledging that the risks of a further OCR cut are growing, while stopping short of saying it’s a probability.”