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NZD merchants – Westpac forecasts the RBNZ to chop by 25bps in October and November 2024

Forecast for the Reserve Bank of New Zealand from Westpac in New Zealand.

Westpac revises RBNZ rate cut forecast, now sees October and November easing

  • Westpac now expects RBNZ to cut OCR by 25bps to 5.25% in October
  • Further 25bps cut expected in November, bringing OCR to 5% by year-end
  • Bank cites weaker growth outlook and rising unemployment as key factors
  • GDP projected to fall 0.6% in Q2 2024
  • Unemployment rate now seen peaking at 5.6% in 2025
  • Inflation expected to return to 1-3% target range in Q3 2024
  • OCR forecast to reach 4.5% by May 2025, bottoming at 3.75% in early 2026

Westpac’s chief economist Kelly Eckhold notes the RBNZ is likely to take a “measured and data dependent approach” to easing. The bank doesn’t see RBNZ “panicking” despite softer economic data, as domestic inflation remains a concern.

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